There was massive selling presure at the Pakistan Stock Exchange (PSX) with the benchmark KSE-100 Index losing over 550 points on Thursday, with traders saying domestic and international developments.

At the close of business, the index closed at 41,179 after shedding 557 points.

Zubair Motiwala, a former director of the PSX, said that the key international development was the increase in policy rate by the US Federal Reserves, which announced a 50 basis point increase. Investors believe it would result in the flight of capital to the US due to higher return following the increase.

Uncertainty on the eocnomic and political front also contributed to the selling pressure witnessed during the day.

The trading started on a positive note following the development regarding Engro Corporation. It notified the exchange of a purchase/buyback of the company’s 70 million ordinary shares.

At day end, index-heavy sectors including commercial banks, automobiles, cement, chemicals, and oil and gas exploration companies ended with losses.

“It is a result of an increase in political volatility, after ex-prime minister Imran Khan’s recent announcement, which generated a lot of uncertainty in the market,” Sana Tawfik, analyst at brokerage house Arif Habib Limited (AHL), told Business Recorder.

The PTI chief is on a collision course with the government, and has threatened the dissolution of two provincial assemblies where his party is in power. On Wednesday, he said that he would announce the date of dissolution on December 17.

“Markets would remain would under pressure till December 17,” Tawfik added.

“Moreover, the US Fed Reserve also raised its policy rate due to which markets around the world are under pressure,” she added.

The Federal Reserve raised interest rates by half a percentage point on Wednesday and projected at least an additional 75 basis points of increases in borrowing costs by the end of 2023 as well as a rise in unemployment and a near stalling of economic growth.

The Fed’s policy rate, which began the year at a near-zero level, is now in a target range of 4.25% to 4.50%, the highest since late 2007.

A post-market report from Capital Stake said that indices traded in red for most part of the day.

“Analysts linked the downward trend to volatility on the political front and delay in the ninth review of the International Monetary Fund (IMF),” said the report.

In a key development, as per data released by the Pakistan Bureau of Statistics (PBS), Large Scale Manufacturing Index (LSMI) output decreased by 7.75% for October 2022 when compared with the same period last year, and 3.62% when compared with September 2022.

On the economic front, rupee ended up unchanged against the US dollar on Thursday, to close at 224.71 in the inter-bank market.

Sectors driving the benchmark KSE-100 in the red included, banking (178.37 points), oil and gas exploration (104.94 points) and technology and communication (67.18 points).

Volume on the all-share index increased to 245 million from 146.7 million on Wednesday. The value of shares traded increased to Rs7.59 billion from Rs3.91 billion recorded in the previous session.

Bank Alfalah Limited was the volume leader with 41.70 million shares, followed by WorldCall Telecom with 18.58 million shares, and K-Electric Limited with 10.05 million shares

Shares of 330 companies were traded on Thursday, of which 67 registered an increase, 249 recorded a fall, and 14 remained unchanged.