KARACHI - In a bid to bring the stock market out of current turmoil and to provide breathing space to the brokers and investors, the KSE has decided to reduce the limits of lower lock from five per cent to one per cent and increase the limits of upper lock from five per cent to 10 per cent. The KSE management has also decided to impose ban on short selling in futures along with accepting the bank guarantee for cash margin. The amendments will be valid for one month. The decision was taken in an important meeting held between the SECP and the KSE here on Monday in the backdrop of the unabated trend of massive erosion in the index and capitalization of Karachi Stock Exchange, sources told The Nation. In the meeting the Securities and Exchange Commission of Pakistan and Karachi Stock Exchange management have also decided to jointly launch a market stabilization fund soon in line with the international market stabilization fund to boost up the sentiments of the investors. "If the KSE had taken such steps earlier, the massive erosion in the index and capitalization witnessed in the stock market for the last 2 months, could have been averted," brokers said. The recent turmoil in the market has seen the index plunge by nearly 4,000 points in the last 2 months, As a result of which small brokers and investors have wiped out of the stock market. "Such steps of KSE are not a long term solution, but it will avert further damage at stock market in the short run, brokers said. Brokers said that KSE has done it best by reducing the lower circuit and increasing upper circuit, while market stabilization fund will restore the confidence of the investors. Such move of KSE will give space to the brokers to manage and coordinated their problems in terms of margin calls and other issues. "The major problem of the stock market is liquidity and political instability," brokers said. The prevailing uncertain environment has taken its toll on almost all sectors as the market plunged by 25% in the last 2 months.  However amongst major sectors, the banking sector has been most affected as weaker economic environment, coupled with monetary tightening have aroused negative sentiments among investors.  While the direction of the share price movement is not unusual as banks have high correlation with economic cycle, it is the magnitude of the decline which has surprised most observers.