KARACHI: Pakistan’s stock market on Tuesday witnessed a bearish spell with the key stock index falling nearly 2 percent in the overbought market, analysts said, attributing it to uncertainty over a caretaker administration that is expected to take over the country. 

The benchmark KSE-100 index shed 956 points, or 1.98 percent, to close at 47,429.82 points from the previous day’s close of 48,386 points, according to the data shared by the Pakistan Stock Exchange (PSX). 

Analysts attributed the fall to uncertainty relating to formation of the caretaker government after the expected dissolution of the Prime Minister Shehbaz Sharif-led government on Wednesday. 

“Stocks closed sharply lower on political noise amid uncertainty over appointment of caretaker setup and the falling rupee,” Ahsan Mehanti, CEO of the Karachi-based Arif Habib Corporation brokerage house, told Arab News. 

Pakistan’s stock market has displayed a remarkable performance since July after the approval of a critical $3 billion bailout from the International Monetary Fund (IMF), which also unleashed funds from friendly countries, including Saudi Arabia and the United Arab Emirates (UAE). 

The Pakistani bourse has gained around 20 percent since the last month and breached the 49,000-point mark for the first time in six years. The key index has surged by almost 8,000 points. 

“The market was overbought and the correction was due after recent about 8,000 points gain,” Samiullah Tariq, a research director at the Pakistan Kuwait Investment Company, told Arab News. 

“Overall sentiment at the stock market is positive.” 

The South Asian nation’s current government, which assumed power after ousting former premier Imran Khan through a vote of no confidence in April last year, is expected to go home on Wednesday. 

The decline can be attributed to investor preference to book gains as the current coalition government’s term comes to an end, where investors want to see if the caretaker government will continue with economic reforms that the outgoing administration undertook after a deal with the IMF, according to a market review by the Topline Securities brokerage company. 

Share prices of the Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited (PPL), Habib Bank Limited (HBL), Pakistan State Oil (PSO) and the Systems Limited declined on Tuesday, resulting in a collective impact of 401 points. 

The volume and value of shares traded on Tuesday stood at 336 million and Rs12.5 billion, respectively. 

On the other hand, the pressure on Pakistan’s national currency continues to persists amid high demand for dollar for import payments. 

The rupee on Tuesday closed 0.17 percent lower with the greenback rising to Rs287.91 in the interbank market, according to the central bank data. 

However, the national currency appreciated on Tuesday in the open market from Rs295 of previous day close to Rs294.5 against the dollar.