KSE-100 slides to one-month low after falling 1.63% ahead of monetary policy announcement

Heavy selling pressure was witnessed at the Pakistan Stock Exchange (PSX) as the benchmark KSE-100 was down over 1,000 points during trading ahead of the monetary policy announcement on Monday.

Bears held sway over the market since the start of the session and continued it till the end.

At close, the benchmark index settled at 62,773.72, down by 1,039.34 points or 1.63%. The last time the index closed below 63,000 was on December 29, 2023.

Across-the-board selling was witnessed among index-heavy sectors including cement, chemical, commercial banks, oil and gas exploration companies, OMCs, power generation and refinery.

Index-heavy OGDC and PPL traded in the red amid confusion over the settlement of energy sector circular debt issue.

During the previous week, the bourse managed to close on a positive note as the benchmark KSE-100 index increased by 530.83 points on week-on-week basis and closed at 63,813.06.

Experts said uncertainty over the settlement of the circular debt was driving the bearish trend. Moreover, the investors were also cautioned about the Monetary Policy Committee (MPC) decision regarding the policy rate.

As reported earlier by Business Recorder, the MPC maintained status quo and kept the key policy rate at 22%, it was announced on Monday.

“While arriving at the decision, the Committee observed that the frequent and sizeable adjustments in administered energy prices have slowed down the pace of decline in inflation anticipated earlier, besides impeding a sustained decrease in inflation expectations,” the monetary policy statement read.

In the previous meeting held on Dec 12, 2023 also, the Committee had maintained the policy rate at 22% as it believed that a hike in gas prices might have implications for the inflation outlook.

The policy rate has remained unchanged since June 2023, when the MPC convened an emergency meeting and decided to raise the policy rate by 100 bps to 22% to keep the real interest rate firmly in the positive territory on a forward-looking basis.

“We remain positive on Pakistan equities, with room for significant gains if elections and a new International Monetary Fund (IMF) programme are navigated smoothly,” said Intermarket Securities Limited in a note on Monday.

Meanwhile, the rupee registered a marginal decline against the US dollar, depreciating 0.02% in the inter-bank market on Monday. As per the State Bank of Pakistan, the local unit closed at 279.64 after a decline of Re0.05 against the greenback.

Volume on the all-share index decreased to 317.5 million from 412.8 million a session before.

The value of shares declined to Rs10.7 billion from Rs16.2 billion in the previous session.

K-Electric Ltd was the volume leader with 46.7 million shares, followed by P.I.A.C.(A) with 23 million shares, and WorldCall Telecom at 21.5 million shares.

Shares of 348 companies were traded on Monday, of which 73 registered an increase, 253 recorded a fall, while 22 remained unchanged.