Rising political volatility took a toll on the Pakistan Stock Exchange (PSX) as the benchmark KSE-100 lost over 1.8% during trading on Thursday on account of selling, especially in energy sector stocks.

At close, the benchmark index settled at 61,020.06, a decrease of 1,133.79 points or 1.82%. Index-heavy stocks including OGDC, PPL and PSO closed deep in the red.

Experts said rising political volatility and its projected impact on the economy of the country is taking a toll on market sentiment.

On Tuesday, the PSX plunged over 1,450 points in the opening few minutes of trading when it was learnt that the International Monetary Fund (IMF) was not onboard with the government’s circular debt plan, but then made a dramatic turnaround.

On Wednesday, the benchmark index settled with a gain of over 1.5% at 62,153.84.

Moody’s Investors Services (Moody’s), meanwhile, has termed the political uncertainty in Pakistan following inconclusive election results a credit negative.

The rating agency in its latest report on Pakistan stated that overall, uncertainty around Pakistan’s ability to quickly negotiate a new IMF programme after the current one expires in April 2024 remains very high.

On the corporate front, PSO posted massive consolidated losses to the tune of Rs10.43 billion in the second quarter of fiscal year 2023-2024 on account of a massive increase in operating and financial expenses.

On the political front, as per media reports, the Azad Jammu & Kashmir Election Commission issued an arrest warrant for Pakistan Tehreek-e-Insaf (PTI) leader Ali Amin Gandapur.

Gandapur has been nominated for the chief minister slot of Khyber-Pakhtunkhwa.

Globally, Asian stocks rose on Thursday, with the Nikkei breaching a new 34-year peak, while the dollar took a breather near a three-month high as markets assess when the Federal Reserve is likely to start its easing cycle after a run of strong economic data.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.7%, with the IT index surging more than 2%.

Europe’s stock markets opened on the front foot on Thursday after gains elsewhere, despite news that the UK economy has entered an official recession.

Meanwhile, the Pakistani rupee recorded a marginal decline as it depreciated 0.02% against the US dollar in the inter-bank market on Thursday. At close, the local unit settled at 279.38 after a loss of Re0.06 against the greenback, as per the State Bank of Pakistan.

Volume on the all-share index increased to 345.1 million from 303.9 million a session ago.

The value of shares declined to Rs11.87 billion from Rs14.68 billion in the previous session.

K-Electric Ltd was the volume leader with 33.32 million shares, followed by P.I.A.C.(A) with 28.6 million shares, and Media Times Ltd with 22.4 million shares.

Shares of 344 companies were traded on Thursday, of which 85 registered an increase, 238 recorded a fall, while 21 remained unchanged.