A major upset in Senate elections and subsequent political developments jolted the stock market on Thursday as the benchmark KSE-100 index nosedived nearly 900 points.

Contrary to market expectations, Finance Minister Abdul Hafeez Shaikh lost contest for a Senate seat to former prime minister Yousuf Raza Gilani, which dampened investor interest and sparked selloff during the day.

Aiding the dip, Foreign Minister Shah Mehmood Qureshi announced late on Wednesday that Prime Minister Imran Khan would seek a fresh vote of confidence from the National Assembly.

Uncertainty shrouded trading at the stock market owing to the emerging political situation and market participants resorted to panic selling, resulting in a steep fall in the KSE-100 index.

Index-heavy automobile, cement, oil, financial and fertiliser sectors bled throughout the session and some of them closed entirely in the red.

The session opened with a drop of over 1,000 points, however, a modest recovery followed over the next few hours.

Investor sentiment weakened towards midday on rumours that the vote of confidence would be held on Saturday, which gave the investors little room to sell stocks and book profit. The bearish spell accelerated towards the close, inflating the losses.

At close, the benchmark KSE-100 index recorded a decrease of 882.24 points, or 1.91%, to settle at 45,278.54 points.

In comments to The Express Tribune, BMA Capital Executive Director Saad Hashmi pointed out that the major reason behind the market’s plunge was the unexpected outcome of Senate elections.

“The KSE-100 plunged over 1,000 points at the start of trading session, however, it recovered partially and ended the day down by 882.25 points,” he said. “Political uncertainty encouraged investors to offload their stockholdings.”

He added that the fall was the result of the loss of a key Islamabad seat for the government combined with the fact that the opposition now had over 50 seats (about half) in the Senate.

The outlook for the stock market over the next few days depends largely on Prime Minister Imran Khan’s speech to the nation on Thursday night.

Rumours were doing rounds that the vote of confidence by the premier would be held on Saturday and its outcome would determine direction of the market in the next week.

“Uncertainty will continue to prevail until the no-confidence vote is held,” the analyst said.

A report of Arif Habib Limited stated that Finance Minister Abdul Hafeez Shaikh’s defeat in Senate elections trumped the KSE-100 index, which dropped 1,073 points at the opening bell.

A recovery ensued on expectations about the vote of confidence to be sought by the prime minister, which curtailed the loss from -1,073 points to -350 points during the session. Stock selling was observed across the board.

By midday, prospects of redemption of mutual funds put the index under pressure again, which continued till the end of trading. During that phase, the market took a double dip and ended lower by 882 points, the report said.

Overall trading volumes increased to 441.5 million shares compared with Wednesday’s tally of 403.7 million. The value of shares traded during the day was Rs21.2 billion.

Shares of 412 companies were traded. At the end of the day, 46 stocks closed higher, 358 declined and eight remained unchanged.

K-Electric was the volume leader with 33.1 million shares, losing Rs0.17 to close at Rs3.96. It was followed by Ghani Global Holdings with 28.7 million shares, gaining Rs0.92 to close at Rs18.67 and TRG Pakistan with 25.8 million shares, losing Rs4.9 to close at Rs142.71.

Foreign institutional investors were net sellers of Rs417 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.