Stocks bleed amid border tension
Bears went on a wild rampage at the Pakistan Stock Exchange (PSX) on Wednesday, dragging the benchmark KSE-100 index down by more than 3%, with a staggering 3,500+ points drop.
Investor panic surged as geopolitical tensions between Pakistan and India flared, sparking fears of military escalation.
The development drew global attention about Pakistan's financial sector. International media outlet Bloomberg reported that Pakistani stocks are underperforming most peers in April while dollar bonds and the rupee also fell, amid the threat of war with neighbour India.
It also quoted Pakistan's Information Minister Attaullah Tarar as saying that India would carry out military action in the next 24 to 36 hours, adding Pakistan would respond "assuredly and decisively."
The media house also mentioned that Pakistan's dollar bonds are poised for the worst month since 2023, as the escalating tensions with neighbouring India roil investor sentiment.
The market bloodbath reflected growing uncertainty, with analysts pointing to defensive repositioning and an urgent flight from risk as sentiment turned sharply negative across the board.
KTrade Securities MD Naveed Vakil told The Express Tribune that the market faced significant pressure Wednesday due to margin-based selling amid border escalation concerns.
At the same time, foreign institutional selling also took place as global fund managers were tracking developments. He sees the next 24-48 hours as critical, while the State Bank of Pakistan's (SBP) with Monetary Policy announcement on Monday may offer some support.
In a similar note, AKD Securities Director Research Muhammad Awais Ashraf shared that escalating tensions and the potential for military action between India and Pakistan have triggered panic selling among investors.
He however suggested that the current volatile situation is an opportune moment to invest in fundamentally strong stocks poised to benefit from ongoing macroeconomic improvements and structural reforms.
In the morning, trading opened on a positive note, but war fears soon gripped the environment, keeping bears firmly in control throughout the day. The day also witnessed record selling by foreign investors, reversing the brief early optimism that had lifted the market at the open, driving the index to swing between an intra-day high of 114,066.13 and a low of 110,631.84.
Arif Habib Corp MD Ahsan Mehanti wrote in his brief note, "Stocks fell across the board following government reports that India may carry out military action against Pakistan."
Rupee instability, a slump in global crude oil prices, and fears over the outcome of heightened Pakistan-India border tensions played a catalytic role in the record bearish activity, he remarked.
At the close of trading, the benchmark KSE-100 index recorded a massive loss of 3,545.60 points, or -3.09%, and settled at 111,326.58.
Topline Securities wrote in its review that the market suffered a sharp and broad-based decline on Wednesday, as intensifying geopolitical tensions between Pakistan and India sent shockwaves through investor sentiment.
The downturn was primarily fuelled by fears of an imminent military escalation. The Minister for Information and Broadcasting disclosed that Islamabad has "credible intelligence" indicating that India may launch a military strike within the next 24 to 36 hours.
The announcement triggered widespread risk aversion, with investors rushing to reduce exposure amid heightened uncertainty.
Key heavyweight stocks significantly contributed to the market's fall. Notable laggards included Lucky Cement, Engro Holdings, United Bank, Pakistan Petroleum, and Fauji Fertiliser, which collectively pulled the index down by 1,132 points, added Topline.
Insight Securities Head of Sales Ali Najib wrote that stocks experienced a bloodbath as warmongering hype reached its peak after a yester-night press conference by information minister suggesting the likelihood of an Indian military strike in the next 24-48 hours.
The last trading session of the month opened on a negative note due to investors' anxiety over a potential conversion of prevailing escalation into a full fledge war.
Overall trading volumes increased to 491 million shares compared with Tuesday's tally of 409.9 million.
Shares of 457 companies were traded. Of these, 60 stocks closed higher, 352 fell and 45 remained unchanged.
Cnergyico PK was the volume leader with trading in 46.2 million shares, falling Rs0.72 to close at Rs7.09. It was followed by WorldCall Telecom with trading in 40.7 million shares, losing Rs0.01 to close at Rs1.25 and The Bank of Punjab with 20.1 million shares, dipping by Rs0.36 to close at Rs9.12.
During the day, foreign investors sold shares worth Rs1.12 billion, the National Clearing Company of Pakistan Limited (NCCPL) reported.