KARACHI, Dec 31: The Karachi stock market crashed on Monday by 696 points (4.71 per cent) recording the biggest one-day fall in the bourse’s history.

When trading began after three days of closure, market took the full brunt of the blow of Thursday’s Liaquat Bagh tragedy and the political uncertainty and street riots that followed in its wake. Within one day, which several analysts termed as a “black Monday”, Rs213 billion evaporated from market capitalisation.

The fear of flight of foreign capital and excessively high leveraged position at Rs54 billion triggered panic selling by punters and speculators who had bought stocks on borrowed money. But as more than 40 scrips touched their ‘lower locks’ — representing maximum of 5 per cent of the value that a stock can shed in a day — investors were unable to seek an exit. Volume thus shrank to just 71 million shares, nearly one-fifth of the stocks traded on Thursday.

Aqeel Karim Dhedhi, a major market player, said that confidence had to be created in the minds of the public to halt the slide.

He argued that there was no dearth of liquidity.

Brokers were unanimous in their view that the sooner the uncertainty over the ‘elections’ was over, the quicker the markets could recover. An analyst said that the rout was not limited to just the stocks but pointed to the value of the rupee which had dipped to a 6-year low at Rs61.85 to a dollar on Monday.

No one was willing to hazard a guess about the future but many equity strategists were expecting the stocks to bottom out after a 7 to 10 per cent fall. Ironically, the market crash has followed a spectacular boom that saw the KSE-100 index touch it all-time high of 14,814 on Wednesday.

AFP adds: The drop was more than the 4.6 per cent fall recorded on Nov 5, the first day of trading after President Pervez Musharraf declared a state of emergency on Nov 3.

The stock market slide raised fears of wider economic problems, with planned January 8 polls widely expected to be delayed.