PSX falls by over 1,900 points after record highs

The Pakistan Stock Exchange (PSX) on Thursday continued to fall on the second consecutive day as KSE-100 witnessed a 1,992-point drop during intraday trading.

While Oil and Gas Tradable Sector Index (OGTI) was hit the hardest by the bearish trend, recording a fall by 3.82 percent after losing 1,119 points at closing time, such lows are common at the end of the year as investors resort to profit taking.

The director of research from AKD securities attributed the fall in the PSX due to it being the last week of rollovers of future contracts and also partly due to investors realigning their portfolios.

At the end of the year, investors often sell high performing assets. This is because high performing assets often grow to form a large part of an investor’s portfolio and are sold off for diversification purposes, usually causing a sharp decline. 

Aside from the general trends, some global developments have also created an environment that might not be conducive to generate returns for investors. One such development is the fall in global crude oil prices.

Financial experts are speculating that the substantial hit to the OGTI was probably due to the downward trend in global oil prices. A drop in international oil prices is usually accompanied by the government revising oil prices on a national level as well. 

This could cause a fall in revenue for oil companies and investors were quick to pick up on this. As many as 12 out of the 13 publicly traded companies listed under oil and gas marketing and exploration suffered as their position declined at the end of intraday trading. Hascol was the only oil company in the green, resulting in an 8.24 percent increase in share value.

Another pressing issue causing the decline in the PSX is the air force’s airstrike on Tehreek-e-Taliban Pakistan (TTP) hideouts in Afghanistan. The fear of retaliation from TTP is enough to shake investor confidence given Pakistan’s history of terror attacks.

However, some industries remained in the green despite the financial carnage witnessed by stock brokers. Jute and leasing companies both posted healthy gains as the market closed. Crescent Jute and Pak Gulf Leasing witnessed a 14 percent and nine percent rise in share value, respectively.

As the year comes to a close, the question on many financial experts’ minds is if the overall bullish trends from this year will carry into the next year. Only time will tell.