KARACHI: The KSE-100 Index dropped nearly 500 points shortly after trading for the day began on Tuesday morning.

The plummet in the index comes a day after the Federal Investigation Agency arrested two directors and the Chief Executive Officer of AKD Securities for allegedly 'manipulating' an Employees Old Age Benefit Institute investment scheme in 2010, which resulted in a loss of over Rs250m to the national exchequer.

Tuesday's session started with the index resting at 33,009.13 but it fell to 32,515.05 within an hour ─ a drop of about 1.5 per cent at 494 points.

Since then, the index has recovered by about 133 points since then, reflecting a drop of 361 points since the day's trading began.

KSE-100 went into a tailspin on Monday in line with global trends, as several negative developments shook equity investors.

Due mainly to weak manufacturing data, Chinese stocks plunged 7pc in the first session of 2016. Investors’ anxiety was also at a high pitch as political tensions between Iran and Saudi Arabia escalated.

The Chinese stocks and Saudi-Iran tensions sent traders scurrying from stocks as European markets and US futures also joined the global selloff.