‘Massacre at the bourse’ as Pakistan stocks plummet in steepest ever pointwise decline

ISLAMABAD: Pakistan’s stock market plummeted 5,132 points in a single trading session on Thursday, marking its steepest ever point-wise decline on the back of significant redemptions from local mutual funds and year-end profit-taking.

The benchmark KSE-100 index dropped 4.32 percent to close at 106,274.97 points on Thursday, compared to Wednesday’s close of 111,070.29 points.

“This sharp sell-off was triggered by significant redemptions from local mutual funds, compounded by year-end profit-taking by institutions, collectively dragging the market into turmoil,” Topline Securities said in its daily market review, declaring a “massacre” at the bourse.

Mari Petroleum Company Limited extended its losing streak, “locking at the lower circuit for the third consecutive session.”

“Persistent concerns over its overvaluation, particularly concerning near-term fundamentals, fueled the relentless sell-off,” the report said. 

Hub Power Company Limited, United Bank Limited, Oil and Gas Development Company, and ENGRO led the decline, together contributing a staggering 1,556 points to the index’s overall decline.

“Despite the bleak sentiment, trading activity remained robust, with a total volume of 1,155 million shares and a turnover of $203.74 million (Rs56.6 billion),” the report said. “Worldcall Telecom Limited topped the volume chart, trading an impressive 177 million shares during the session.”

During intra-day trading, stock analysts cited profit-taking and concerns over foreign outflows as the main reasons behind the slump.

“Stocks bearish on concerns over foreign outflows and outlook for cautious SBP [State Bank of Pakistan] policy easing on susceptible multiple risks,” Chief Executive Officer of Arif Habib Commodities Ahsan Mehanti told Arab News.

“Consolidation in the blue-chip scrips, rupee instability and weak global crude oil prices played a catalyst role in bearish activity.”

Blue-chip stocks in the PSX include large, stable companies like OGDC, Hub Power, Engro, Nestlé and Lucky Cement. These companies are known for strong performance, financial stability, and industry leadership, making them popular for long-term investments.

The decline comes days after Pakistan’s central bank cut its key interest rate by 200 basis points to 13 percent, marking the fifth straight reduction since June. 

Yousuf M. Farooq, director of research at Chase Securities, said the market had entered a corrective phase following a significant rally over the past year.

“We believe that earnings will now drive market performance rather than valuation rerating. The correction has been exacerbated by multiple research reports downgrading Mari Petroleum to a sell,” he said, adding that overall valuations in the market remained attractive and below their long-term averages.

However, Farooq said he was optimistic about the economy and the stock market and the full impact of recent interest rate cuts had yet to materialize and would require time.

“Looking ahead, we anticipate a slower pace of rate cuts, with reductions of 50bps to 100bps expected over the next year, as opposed to the larger cuts seen previously,” he said, advising long-term investors to stay patient and focus on the “bigger picture.”