The Pakistan Stock Exchange (PSX) witnessed a sharp pullback on Tuesday as the benchmark KSE-100 Index lost more than 500 points during early trading hours, snapping a record-setting rally that spanned over seven sessions.
Market analysts attributed the dip to profit-taking by investors following a prolonged bullish run, coupled with growing uncertainty over the global economic outlook amid fresh tariff-related developments by the United States.
At 10:15am, the KSE-100 Index was down by 501.25 points or 0.38 per cent, hovering around 132,868.89. Selling pressure was evident across key sectors including automobile assemblers, commercial banks, cement, fertiliser, oil and gas exploration, and power generation.
Heavyweight stocks such as Hub Power Company (HUBCO), Mari Petroleum (MARI), Oil and Gas Development Company (OGDC), Pakistan State Oil (PSO), MCB Bank, Meezan Bank (MEBL), and United Bank Limited (UBL) were trading in the red, contributing significantly to the index’s decline.
The market’s retreat follows Monday’s record-breaking close, where the KSE-100 surged by 1,421 points or 1.08pc to settle at an all-time high of 133,370, fuelled by strong corporate earnings expectations and improving macroeconomic indicators.
However, stockbrokers had earlier cautioned that a market correction was overdue, especially after the index gained approximately 11,500 points in just seven sessions.
“The market was overheated. A brief correction was necessary and expected,” said a senior equity dealer at a Karachi-based brokerage house. “Investors opted to cash in profits amid global uncertainty and concerns over potential capital flight if volatility increases.”
The volatility also mirrors trends across Asian markets, which displayed mixed sentiments following the latest tariff-related pronouncements by former US president Donald Trump.
On Tuesday, Trump sent official letters to 14 nations — including key trade partners Japan and South Korea — announcing a steep hike in tariffs on imports to the US, while allowing a brief reprieve until August 1 for further negotiations.
Although Japan’s Nikkei initially opened lower, it later edged up by 0.4pc after Trump described the August 1 deadline as “firm, but not 100pc firm.” South Korea’s KOSPI also advanced by 1.5pc, while MSCI’s index of Asia-Pacific shares outside Japan rose 0.2pc in early trade.
Meanwhile, Japanese Prime Minister Shigeru Ishiba voiced strong concerns over the proposed tariff hike, calling it “deeply regrettable” and reaffirming Tokyo’s intention to keep negotiations with Washington open.
In the past few months, the PSX has rallied on the back of improved investor confidence, reflecting a mix of easing inflation, strengthening rupee, and upbeat corporate earnings projections. But market watchers say the ongoing global uncertainty and geopolitical tensions may trigger intermittent profit-taking and volatility in the short term.
“While fundamentals remain strong for the local equity market, international developments such as tariff hikes, commodity price swings, and foreign outflows can pose short-term headwinds,” said another market analyst.
