Bears dominated the trading floor on Monday as shares at the Pakistan Stock Exchange (PSX) declined by more than 1,500 points because of “heightened political tensions”.

The benchmark KSE-100 index shed 1370.56 points, or 1.71 per cent, to stand at 78,747.33 points around 12pm from the previous close of 80,117.89 points. Finally, the index closed at 78,539.18 points, down by 1578.71 points or -1.97pc, from the previous close.

“Heightened political tensions and media reports on banning Pakistan’s largest and most popular political party have dragged down sentiment,” Yousuf M Farooq, director of research at Chase Securities, told Dawn.com.

“Moreover, after a large rally, a correction was due and heightened political noise has become a reason for a correction,” he reasoned.

Mohammed Sohail, chief executive of Topline Securities, noted that big selling by local institutions on Friday, along with political noise, had affected the market, resulting in the downward trajectory of the index.

Raza Jafri, chief executive of EFG Hermes Pakistan, said, “Political noise, together with aggressive institutional selling in Index heavyweight names, has led the market lower since Friday”.

“Value buying has started to come back cautiously though,” he added.

On July 15, the federal government announced that it was deciding to ban PTI and was seeking Article 6 proceedings against its founder Imran Khan, ex-president Dr Arif Alvi, and former National Assembly (NA) deputy speaker Qasim Suri.

This was seen as an attempt to prevent the PTI from becoming the single largest party in the NA.

“Investors are worried about the increased political tension resulting from the potential ban on the main opposition party amid geopolitical pressures,” Awais Ashraf, director research of AKD Securites, said.

Shahab Farooq, director research of Next Capital Limited, attributed the bearish momentum to political uncertainty and concerns on further rate cut in July’s monetary policy committee (MPC) meeting.

He also said that “a healthy result season may resume investors’ confidence going forward” — if the political environment remains calm.