Pakistan stocks plunge amid political uncertainty as talks with PTI broke down

Pakistan's stock market experienced a significant drop on Tuesday, driven by political uncertainty following the breakdown of negotiations between the government and the opposition.

The sell-off impacted key sectors, including exploration and production companies (E&Ps), oil marketing companies (OMCs), and banks.

Dismal financial results in the oil sector, recent gas reforms affecting industrials, and rupee instability exacerbated the bearish trend.

Despite the market turmoil, some analysts see a silver lining in the State Bank of Pakistan's recent decision to cut the interest rate to 12%. This move is expected to improve market conditions and boost investor sentiment.

The uncertainty surrounding the outcome of negotiations between the government and the Pakistan Tehreek-e-Insaf (PTI) party played a significant role in the bearish activity, according to market experts.

KSE-100 index declined 1.31% or 1,489.96 points to close at 112,030.36 points.

The Indian stock market bounced back strongly on Tuesday. The recovery was led by major banking and financial companies, with investors showing renewed interest ahead of the Budget and fair market valuations.

While the overall market did well, mid-sized companies saw a small gain of 0.5%, but smaller companies experienced a loss of over 1%.

The boost came mainly from banking and financial stocks, which benefited from the Reserve Bank of India's (RBI) announcement to inject ₹1.5 trillion into the financial system.

BSE-100 index gained 0.44% or 104.43 points to close at 23,969.21 points.

DFM General Index lost 0.29% or 14.92 points to close at 5,176.73 points.

Commodities

Oil prices stayed close to their lowest in two weeks on Tuesday because of weak economic news from China and warmer weather predictions elsewhere, which hurt demand expectations.

China, the world's biggest buyer of crude oil, said on Monday that its manufacturing activity unexpectedly dropped in January, causing worries about global oil demand growth.

Brent crude prices surged 0.86% to $77.44 per barrel.

Gold prices went up because investors stopped selling to cover their losses in the stock market, which were caused by the new Chinese AI model, DeepSeek.

Yesterday, tech stocks dropped globally because DeepSeek, launched on January 10th, was more advanced and cheaper to use compared to other models, and it was free.

This led to many people selling their gold to make up for the stock market losses. However, gold prices bounced back today as the Federal Reserve meeting drew near.

International gold prices increased 0.29% reaching $2,742.14 per ounce.

Currency

US dollar steadied against PKR in the inter-bank market. Pakistani currency shed 9 paisas to 278.92. In the open market USD was trading at PKR 281.