PSX sheds 1,000 points ahead of policy rate announcement

Bearish momentum dominated the Pakistan Stock Exchange (PSX) on Monday as shares declined by 1,000 points ahead of the announcement of the monetary policy.

Shortly after the opening bell, the benchmark KSE-100 index breached the 73,000 barrier to trade at a record high of 73,300 before plummeting sharply.

The index declined by 728.40 points, or 1 per cent, to stand at 72,014.34 points at 1:56pm from the previous close of 72,742.74. The index closed at 71,695.03, down by 1047.71 points or 1.44pc, from the previous close.

Mohammed Sohail, chief executive of Topline Securities, stated that after last week’s 5pc rally, investors chose to book profits today.

“Moreover there is uncertainty in whether or not the State Bank of Pakistan (SBP) will reduce the rates,” he said.

The central bank’s monetary policy committee (MPC) will meet today to take a decision regarding the key interest rate policy. Last month, the committee had chosen to maintain the status quo by upholding the key policy rate at 22 per cent for the sixth policy meeting in a row.

Tahir Abbas, head of research at Arif Habib Limited, said, “The market is taking some correction ahead of the monetary policy announcement later today.”

He observed that different surveys suggested “a clear divide of 50-50pc” on expectations of a rate cut.

Awais Ashraf, director of research at Akseer Research, noted that the downward trajectory indicated “a cautious stance among investors ahead of the MPC announcement, amid divided expectations regarding a potential rate cut.”

“Additionally, disappointing results from Mari Petroleum and reduced cash payouts from the Hub Power Company (HUBC) also contributed to the downward pressure on the index,” he added.

Shahab Farooq, director of research at Next Capital Limited, echoed the same sentiments. He noted that after opening positively, the equity market “moved in the negative territory as participants opted to book profits ahead of the MPC meeting today”.

“Lower than expected cash payout by the HUBC — an index heavy weight — also put pressure on the KSE-100 Index,” he said.