Karachi: Panic selling led to a major drop in the benchmark index of the Karachi Stock Exchange (KSE) on Monday.
The KSE-100 Index went down 3.97%, or 1,370 points, to reach 33,149.6 points at 1:03pm on the week’s first day of trading. It had declined by as much as 1,492 points, but gained more than 100 points afterwards.
The drop in the benchmark index since the beginning of trading at 9:30am is equal to the week-on-week decrease in the KSE-100 Index recorded at the end of August 21.
The KSE-100 Index is heading south in line with nearly all global share markets that have been bearish amidst concerns over the slowdown in the Chinese economy and political instability in Greece.
A stock analyst said small investors are panicking and selling their holdings in haste. Their reaction is prompted by foreign selling, he added.
“Foreign investors have been booking losses in (emerging) equity markets plus commodity derivatives elsewhere. They have to make up for those losses by selling profitable stocks in their portfolio elsewhere,” he said. In other words, selling Pakistani stocks at a profit helps foreign investors cover the losses they have incurred during the last few days in other emerging markets.
So far the largest turnover has been recorded in real estate investment and services stocks (19.6%), followed by chemicals (15.3%), cements (11.8%) and textiles (10.3%).
This is a developing story and will updated accordingly.