PSX’s KSE-100 plunges over 1000 points due to divided sentiments on policy rate

Bears dominated the trading floor at the Pakistan Stock Exchange (PSX) on Monday as the investors were seen as divided and uncertain regarding the decision on policy rate by the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP). 

However, the MPC maintained its key policy rate at 22% for the seventh consecutive session.  

But, uncertainty regarding the possible rate cut surrounded the trading floor and the benchmark KSE-100 Index plunged more than 1,000 points or 1.44% during the intraday trade, despite a positive opening in the early hours of trading and touching the day’s highest level of 73,300 points. 

As of 03:20 pm, the KSE-100 was hovering at 71,624.35 points, down by 1118.39 or 1.54%. 

At close, the KSE-100 Index settled at 71,695.03 points, with a decrease of 1,047.71 points or 1.44% from the previous close of 72,742.74 points on Friday. 

Market analysts attributed the downward trend to selling pressure among key sectors including commercial banks, oil and gas exploration companies and OMCs, cement and chemicals. Index heavyweights such as OGDC, PPL, PSO and SHEL landed in the red zone.

Besides the MPC meeting, the International Monetary Fund’s board is also expected to meet today for the approval of the $1.1 billion tranche for Pakistan. 

During the previous week, the market maintained its bullish momentum and despite some profit-takings, challenged its past highs and closed the week at its highest-ever closing at 72,742 points. The benchmark index marked a weekly gain of 1,833 points or 2.58%.

Overall, the positive momentum was largely driven by anticipation of investments from Saudi Arabia, the successful visit of the Iranian President, and the inclusion of Pakistan in the IMF’s executive board agenda. 

In its note, AKD Research said on Friday that the upcoming MPC would remain in the limelight, with the start of monetary easing poised to further support the ongoing bullish trend of the market, which debt-heavy sectors would lead. 

Additionally, the disbursement of the third tranche of the IMF’s SBA and initiation of talks with IMF for the next EFF will be closely monitored, read the note.