The KSE benchmark 100-share index fell 0.55 percent, or 65.11 points, to end at 11,868.17 on turnover of 82.64 million shares.
"Bearish activity was witnessed at the KSE on institutional profit taking in an over bought market," said Ahsan Mehanti, director at Arif Habib Investments.
Dealers said some selling was seen in the fertiliser sector as it led the rally on Tuesday.
Fauji Bin Jordan fell 1.25 percent to end at 61 rupees, while Fatima Fertiliser shed 1.5 percent at 19.68 rupees.
In the currency market, the rupee firmed to 87.20/25 to the dollar compared with Tuesday's close of 87.20/25 amid lack of import payments.
The rupee hit a record low of 87.92 to the dollar last month.
A decision by the government not to seek a new International Monetary Fund loan and speculation of a rate cut would likely add to the pressure on the rupee.
In the money market, overnight rates were flat at the top end of 13.40 percent, unchanged from the previous day's close amid tight liquidity in the interbank market.
Copyright Reuters, 2011