Short-term investors in Egypt are likely to cut more risk on Tuesday after protesters defied a night-time curfew in restive towns along the Suez Canal.
Egyptians attacked police stations and ignored emergency rule imposed by Islamist President Mohamed Mursi to end days of clashes that have killed at least 52 people.
Cairo's main benchmark lost 1.4 percent to close at its lowest in January after the cabinet approved a draft law giving the army the right to arrest civilians.
"The situation is getting worse in Egypt - we've seen the law passed yesterday and it's very similar to the emergency law during Hosni Mubarak's regime," says Ali Adou, portfolio manager at The National Investor.
"The curfew tells you how critical the situation is on the ground. This will affect flows going out of Egypt as the situation continues."
Non-Arab foreigners were net sellers on the market against Egyptian buyers. Foreigners have recently been the buyers amid the turmoil but began cutting their risk exposure on Monday.
"For long-term investors, any weakness provides a buying opportunity, while short-term, opportunistic investors will be selling amid the escalation of violence," Adou adds.
"Foreign investors will try to reduce their risk but not completely exit the market. There are uncertainties, but they were much higher last year, compared to now."
In the United Arab Emirates, Abu Dhabi National Energy Co will be in focus after saying it sealed a US$1.4bn financing for the expansion of its power plant in Morocco.
The state-owned firm's Canadian unit meanwhile, laid off 50 of its 950 employees as it restructures its operations in the country.
The stocks, a heavyweight on the index, is thinly traded due to restricted free float.