American provider of stock market indexes and analysis tools, MSCI has confirmed that the Pakistan Stock Exchange (PSX) has been reclassified from Frontier Markets to Emerging Markets in its semi-annual index review earlier on Tuesday. However, in the first 90 minutes of trading, the benchmark KSE-100 index dipped by more than 300 points.

In a press release issued by MSCI (formerly Morgan Stanley Capital International and MSCI Barra) the company states that it "will reclassify the MSCI Pakistan Indexes from Frontier Markets to Emerging Markets at the May 2017 Semi-Annual Index Review."

In the days leading up to the announcement, the benchmark KSE-100 index saw bullish frenzy as anxious investors were optimistic about the PSX being upgraded to the Emerging Markets Index, pushing the index to an all-time high. Monday's close saw the KSE-100 close at 52,387.87.

Despite the intense wait, the market started Tuesday's trading session on a negative note as investors started to "sell on news" of the reclassification as more than expected companies had been added to the MSCI Pakistan Index, according to Arif Habib Corp's Ahsan Mehanti.

Pakistan's weight in the MSCI Emerging Markets index will be 0.10 per cent, which will take effect on June 1. According to the press release, the three largest constituents of the MSCI Pakistan Index are Habib Bank (weight of 23.72 per cent), United Bank (weight of 17.80 per cent) and Lucky Cement (weight of 16.92 per cent).

Other companies included in the MSCI Global Standard Index (large cap index) include Engro Corporation, MCB Bank and Oil and Gas Development Company.

In the MSCI Small Cap Index list, there were eight unexpected inclusions which included Engro Fertilizers, Honda Car, International Steels, DG Khan Cement, National Refinery, Shell Pakistan, Sui North Gas Pipelines and Thal Jute Mills.

Other companies on the Small Cap index list include Bank Al-Falah, Fauji Cement Co, Fauji Fertilizer Bin Qasim, Fauji Fertilizer Co, Ferozesons Laboratories, Hub-Power Co, IGI Insurance, Indus Motor Company, Kot Addy Power Company, Maple Lead Cement, Millat Tractors, National Bank of Pakistan, Nishat Mills, Packages Ltd, Pak Elektron, Pak Suzuki Motor Co, Pakistan Oilfields, Pakistan State Oil and Searle Pakistan.

Attock Petroleum was not included in the list to the surprise of many.