The Pakistan Stock Exchange (PSX) snapped a five-day bullish streak on Tuesday, falling by over 1,100 points to settle below the 187,000-point mark as investors resorted to profit-taking following the market’s recent record-breaking rally.

The reversal came after economic optimism — driven by falling energy prices and a likely cut in the interest rate — propelled the KSE-100 index above 187,000 points on Monday, leading analysts to believe it might surpass its all-time high of 189,167 in January.

Despite hitting a high of 188,126.67 points early in today’s session, the index then plunged by nearly 1,500 points before 10am, and remained volatile before declining further later in the session. It hit a low of 186,189.21 points at 3:12pm before closing at 186,255.55 points, down by 1,199.14 (0.64 per cent) from its previous close of 187,454.69.

According to Topline Securities Ltd, the decline was driven by selling pressure emerging across key sectors during the latter half of the session.

It noted that investor sentiment remained cautious amid weakness in regional equity markets, prompting participants to lock in recent gains after the KSE-100’s strong upward run over the past several sessions.

On the index contribution front, heavyweight stocks FFC, PPL, UBL, OGDC, and LUCK were the major drags on the benchmark index, collectively shaving approximately 649 points off the day’s performance.

“Despite today’s decline, the broader market outlook remains supported by improving macroeconomic fundamentals and sustained institutional interest,” Topline added.

Awais Ashraf, director of research at AKD Securities, said that the market remained under pressure throughout the day as investors engaged in profit-taking, with the index trading near its all-time high.

“Sentiment weakened further after investors realised that the impact of the reduction in the Minimum Deposit Rate (MDR) for banks was less significant than previously anticipated,” he noted.

Selling was primarily concentrated in the Oil and Gas Exploration, Cement, and Fertiliser sectors, while pressure also emerged in the banking sector during the latter part of the trading session.

Ashraf added that despite the short-term weakness, “we remain constructive on the market outlook”.

“Inflation is expected to fall into single digits from next month, strengthening the case for the initiation of monetary easing. This could serve as a key catalyst for the KSE-100 index to scale fresh record highs,” he said.

Moreover, he added, the market continued to trade at an attractive forward price-to-earnings (P/E) ratio of 6.9x, offering compelling upside potential.