KARACHI —The Pakistan Stock Exchange (PSX) closed sharply lower on Tuesday, erasing early gains as profit-taking and economic concerns outweighed investor enthusiasm over the central bank’s unexpected interest rate cut.
The benchmark KSE-100 Index fell 533.73 points, or 0.47%, to close at 113,568.50. Earlier in the day, the index had surged nearly 700 points, touching an intraday high of 114,787.14 around 1:05pm, buoyed by the State Bank of Pakistan’s decision to reduce the policy rate by 100 basis points to 11%.
The rally was driven by broad-based buying across major sectors including automobile assemblers, cement, commercial banks, oil and gas exploration, refineries, OMCs, and power generation companies. Notable gainers included blue-chip stocks like HUBCO, NRL, PSO, MARI, OGDC, PPL, POL, MCB, UBL, and NBP.
The market response came after the SBP’s Monetary Policy Committee announced a 100 basis point reduction in the policy rate, bringing it down to 11% — a sharper cut than what most analysts had anticipated.
“This cut is higher than market expectations,” remarked Mohammed Sohail, CEO of Topline Securities. Market consensus had largely priced in a more modest 50bps easing.
The rate cut, announced Monday, followed a volatile session during which the KSE-100 Index had recovered from a 1,000-point dip to close nearly flat at 114,102.24.
While domestic markets celebrated the easing monetary stance, global markets remained muted. Concerns over potential U.S. tariffs weighed on investor sentiment worldwide, while crude oil prices continued to languish near four-year lows amid supply increase pledges by major producers.
Analysts expect the central bank’s move to lower the cost of capital and boost corporate earnings, particularly in interest-sensitive sectors such as cement, autos, and banks, possibly setting the stage for continued upward momentum in equities.
