Stocks fall on policy rate status quo

KARACHI:

Pakistan Stock Exchange (PSX) on Tuesday closed modestly lower by 179 points, which analysts attributed to thin trade and investor caution following the State Bank of Pakistan’s (SBP) decision to keep policy rate on hold amid inflationary pressures, price volatility and external account challenges.

Despite a surge in the latter half fuelled by robust remittances, global equity sell-off, a weak rupee and uncertainty surrounding the International Monetary Fund (IMF) review dampened investor sentiment.

According to Ahsan Mehanti of Arif Habib Corp, stocks closed lower amid thin trade after the SBP maintained the status quo in its key policy rate owing to the persistent core inflation, price volatility and external account pressures.

He said that late-session support emerged in the wake of upbeat data showing $3.1 billion in remittances, a surge of 40% year-on-year in February 2025. Global equity sell-off on US recession worries, a weak rupee and uncertainty about the outcome of Pakistan-IMF talks played the role of catalysts in bearish close at the PSX, Mehanti added.

At the end of trading, the benchmark KSE-100 index recorded a decrease of 178.69 points, or 0.16%, and settled at 114,177.66.

In its market review, Topline Securities commented that the KSE-100 index witnessed a fierce tug of war between bulls and bears.

The market opened on a negative note, reacting sharply to the State Bank’s decision to maintain the policy rate at 12%, despite a significant decline in inflation, it said. “This decision dampened investor sentiment, pushing the index to the intra-day low of 746 points.”

However, the second half of the session saw a resurgence of buying interest. Market participants responded positively to speculation about possible clearance of the longstanding circular debt. The optimism propelled the index to the intra-day high of 129 points, Topline said.

The positive movement was primarily fuelled by Pakistan State Oil (PSO), Pakistan Petroleum, Oil and Gas Development Company (OGDC), Meezan Bank and Hub Power, which together contributed 425 points to the index. Conversely, UBL, Service Industries, Fauji Fertiliser Company and Engro Fertilisers pulled the index down by 210 points, it added.

Arif Habib Limited (AHL) remarked that the KSE-100 index saw an early decline to 113,600 points, following the SBP’s decision to leave the policy rate unchanged, before a sharp recovery that brought the index in the green.

Some 26 shares rose while 70 fell with PSO (+6.67%), Pakistan Petroleum (+2.86%) and OGDC (+1.89%) contributing the most to index gains. On the flip side, Service Industries (-5.25%), Engro Fertilisers (-0.83%) and Systems Limited (-1.21%) were the biggest drags, it said.

“The key benchmark indices continue to indicate that accelerated gains are on the menu. The weekly objective remains to be 116,000 points,” the brokerage house added.

JS Global analyst Muhammad Hasan Ather said that the KSE-100 witnessed a range-bound session, with the benchmark index settling at 114,178, down 179 points.

The decline followed the State Bank’s decision to keep the policy rate unchanged, contrary to market expectations. Selling pressure was observed in key sectors including cement and banks, he said.

“Looking ahead, market volatility may persist due to the global protectionist policies and food price fluctuations. Investors should remain cautious and monitor economic indicators,” Ather added.

Overall trading volumes decreased to 318.5 million shares compared with Monday’s tally of 324.7 million.

Shares of 438 companies were traded. Of these, 132 stocks closed higher, 233 fell and 73 remained unchanged. The value of shares traded during the day was Rs22.9 billion.

Sui Southern Gas Company was the volume leader with trading in 26.4 million shares, gaining Rs1.58 to close at Rs37.03. It was followed by The Bank of Punjab with 22.1 million shares, gaining Rs0.04 to close at Rs13.16 and Worldcall Telecom with 18.1 million shares, falling Rs0.02 to close at Rs1.33. During the day, foreign investors sold shares worth Rs315.9 million, the NCCPL reported.