KARACHI: Bears in Pakistan’s equity market strengthened their grip on Tuesday as the country’s key stock index posted its highest-ever single-day decline of 2,534 points amid continued correction after the market hit record highs in recent weeks.

The benchmark KSE100 index crashed 4.1% to close at 59,171 points during the latest session at the Pakistan Stock Exchange (PSX). With the recent decline, KSE100 has dropped 11% or 7,256 points from the peak of 66,427 points on December 12, according to the market data.

Financial analysts termed the bearish spell at the bourse as the corrective phase in the overheated market, though they acknowledged it was also under pressure due to delay in interest rate cuts, political activities gathering pace ahead of the general elections and selling by foreign investors.

“The market is already in the corrective mode for the last seven consecutive sessions which continued today while the participation of foreign investors remains minimal due to new year festivities,” Tahir Abbas, head of research at Arif Habib Limited, told Arab News.

“The rollover week is also pushing the market down,” he said, adding the political climate had heated up over the weekend which was also contributing to the index fall.

Analysts said the investors were concerned about the outcome of the national polls scheduled for February 8.

“Investors are expected to remain cautious due to the ongoing political activities,” Abbas maintained.

PSX hit an all-time high of 66,427 at the outset of the month amid rumors of an interest rate cut. However, the central bank in its monetary policy continued with the 22 percent rate due to persistently high inflation.

“Market was expecting the interest rate cut in December which has now been delayed,” Yousuf Muhammad Farooq, director research at Chase Securities, said, adding: “This is also one of the reasons for the bearish mood.”

“The market was seen going up at a rapid pace and it is now correcting itself in a similar manner,” he continued.

Farooq maintained the future market direction would be set by the outcome of the upcoming polls and the implementation of the International Monetary Fund’s conditions.

Khurram Schehzad, CEO of Alpha Beta Core, a financial advisory firm, termed today’s trading session as “Black Tuesday for the Pakistan Stock Exchange,” adding the “leverage buying and its settlement” were also among the factors that contributed to the fall of the market.