Heavy selling pressure was witnessed at the Pakistan Stock Exchange (PSX) during trading on Monday amid uncertainty among investors over the Monetary Policy Committee (MPC) decision regarding the policy rate.
The KSE-100 started the session positive, hitting an intra-day high of 73,300.75.
However, selling spree soon took hold of the market and pushed the index below 72,000.
At close, the benchmark index settled at 71,695.03, down by 1,047.71 points or 1.44%.
This is a sharp fall given that the KSE-100 had been on a winning run for the past several weeks.
Selling pressure on Monday was witnessed among key sectors including cement, chemical, commercial banks, oil and gas exploration companies and OMCs, with index-heavy stocks of OGDC, PPL, PSO and SHEL trading in the red.
In a key development, the MPC of the State Bank of Pakistan (SBP) kept the key interest rate steady at 22% for the seventh straight meeting, an announcement that was made after market hours.
The key policy rate has remained unchanged at 22% since June, 2023.
The central bank’s policy decision is to be followed by another key development, the IMF Executive Board meeting, to discuss the approval of $1.1 billion in funding for Pakistan, which is the last tranche of the $3 billion Stand-By Arrangement (SBA) with the IMF.
Pakistan’s key rate was last raised in June to fight persistent inflationary pressures and to meet one of the conditions set by the IMF for securing the bailout.
Market experts Business Recorder reached out to earlier were of the view that the central bank might opt to delay any easing of monetary policy as it looked to strike a balance between spurring growth and keeping inflationary pressures in check.
Rate cut: the virtues of patience
During the previous week, however, the PSX witnessed a bullish trend and closed at the highest ever level on the back of healthy buying by both local and foreign investors coupled with institutional support.
The benchmark KSE-100 index surged by 1,832.84 points on week-on-week basis and closed at its highest ever level of 72,742.74 points.
Back then, the market had been divided over the possibility of a rate cut, with investors keenly buying stocks in anticipation.
Globally, Asian stocks got off to a positive start on Monday ahead of the Federal Reserve’s policy meeting later in the week, while the dollar broke past the psychologically key level of 160 yen for the first time in decades.
In the broader market, MSCI’s broadest index of Asia-Pacific shares outside Japan tacked on 0.56%, helped by Wall Street’s positive lead on Friday owing to a rally in megacap growth stocks.
Meanwhile, the Pakistani rupee remained largely stable against the US dollar in the inter-bank market on Monday. At close, the local unit settled at 278.40, a loss of Re0.01 against the greenback, as per the State Bank of Pakistan (SBP).
Volume on the all-share index increased to 613.31 million from 541.14 million a session ago.
The value of shares also rose to Rs26.31 billion from Rs22.59 billion in the previous session.
Hascol Petrol was the volume leader with 60.07 million shares, followed by Fauji Fert Bin with 35.17 million shares, and Pace (Pak) Ltd with 32.65 million shares.
Shares of 385 companies were traded on Monday, of which 133 registered an increase, 231 recorded a fall, while 21 remained unchanged.