The Pakistan Stock Exchange (PSX) continued its downward trajectory on Wednesday, with the benchmark KSE-100 Index shedding over 500 points during the early hours of trading. At 10:35 am, the KSE-100 stood at 111,528.87, down by 501.49 points or approximately 0.45%. This marked a continuation of the recent negative trend in the market, driven by persistent selling pressure across several key sectors.
The primary driver behind the drop was a noticeable decline in the energy sector, which is heavily represented on the KSE-100. Stocks in oil and gas exploration, oil marketing companies (OMCs), power generation, and refining sectors all faced significant losses. Notable names like HUBCO, SHEL, SNGPL, MARI, OGDC, PPL, and POL all traded in the red, contributing heavily to the index’s decline.
Market observers pointed out that the ongoing market turbulence was partly due to the rollover week, a term used to describe the period when the market witnesses adjustments as the settlement of futures contracts takes place. This often results in a temporary increase in volatility. According to Intermarket Securities, the negative trend was exacerbated by the drying up of fresh liquidity, as mutual fund conversions slowed down. “Fresh liquidity needed to sustain current index levels had dried up as conversions at mutual funds have slowed,” said the brokerage in a report.
The brokerage also noted that the market was closely monitoring two major earnings announcements scheduled for release: one from Fauji Fertilizer Company (FFC), expected to declare a payout of Rs35 per share, and another from United Bank Limited (UBL), where investors were anticipating a strong dividend payout. “Negative surprises in these results would dampen investor sentiment further,” the report added, highlighting the potential for further market declines if expectations for these companies were not met.
The previous day had also seen significant selling pressure, with the KSE-100 Index plunging nearly 1,500 points to close at 112,030.36. This decline continued the downtrend that has characterized much of January 2025, prompting concerns among market participants about the broader economic factors contributing to the ongoing losses.
On the international front, markets in the Asia-Pacific region showed more positive momentum on Wednesday. Technology stocks, in particular, saw gains, largely driven by advances in U.S. markets overnight. Wall Street had experienced a rally, with technology stocks leading the charge, as investor sentiment improved amid a reduction in concerns over the global tech landscape.
In Asia, however, trading volumes were thinner due to the Lunar New Year holidays, which saw exchanges in mainland China, Hong Kong, Taiwan, Singapore, and South Korea closed. Despite the holidays, Japan’s Nikkei share average rose by 0.5%, indicating a potential reversal from three consecutive days of declines. Australia’s stock benchmark also gained 0.8%, buoyed by a 2.2% increase in tech stocks.
Meanwhile, U.S. futures for the S&P 500 and Nasdaq Composite were both down by about 0.1%, following strong rallies in the previous day’s session. The tech-heavy Nasdaq had experienced a sharp drop of over 3% in its prior session, fueled by concerns surrounding the popularity of DeepSeek, a Chinese AI startup, which is seen by some as a competitor to U.S. chipmakers like Nvidia.
As the market looks ahead, attention will shift to the earnings reports of major U.S. tech companies, including Meta Platforms, Microsoft, and Tesla. Executives from these companies are expected to face questions on their future spending on computing power, as the industry navigates an increasingly competitive and dynamic environment. With these global developments in mind, investors in Pakistan will likely remain cautious, closely monitoring both domestic and international news for signals that could indicate a potential shift in market sentiment.