Stocks fall on rate-cut pause, IMF worries – Business

KARACHI: Amid a strong reaction from the trade and industry to an interest rate-cut pause despite a sharp slowdown in inflation, the uncertainty about the economic outlook in the view of the ongoing IMF review contributed to a bearish drive for the second straight session on Tuesday.

Explaining the factors that led to the downturn, Ali Najib, Head of Sales at Insight Securities, told Dawn that the PSX remained volatile as investors await the IMF review outcome. “Clarity on fiscal measures, circular debt resolution, and potential policy adjustments will shape market sentiment. A favourable review may drive a rally, while delays or concerns could trigger caution,” he remarked.

He also noted that the country’s economic outlook remained challenging as the widening trade deficit and persistent Large-Scale Manu­fac­turing (LSM) contraction signal sluggish growth. External pressures, currency depreciation risks, and weak industrial output may strain fiscal stability. He stressed that structural reforms, export promotion, and IMF-backed policies were crucial to restoring investor confidence and ensuring sustainable economic recovery.

Against the scattered street expectation of a “cut” in the range of 25-100bps, the SBP’s Monetary Policy Commi­ttee delivered a surprise status quo due to which the benchmark KSE 100 index opened on a pessimistic note and lost 746 points, hitting an intraday low at 113,610.

Topline Securities Ltd Chief executive Mohammed Sohail said the selling was seen in the first few hours of trading after the SBP kept its policy rate unchanged at 12pc. However, the hope that the IMF will allow the resolution of circular debt through bank borrowings helped the market to recover.

The second half of the session saw a resurgence of buying interest.

As a result, the index showed mild recovery towards the end of the session on select value-hunting, trimming early losses and closing at 114,177.66, down 178.69 or 0.16 per cent day-on-day.

Ahsan Mehanti of Arif Habib Corporation said the market tended lower amid thin trade after the SBP left its policy rate steady owing to persistent core inflation, price volatility, and external account pressures.

The trading volume fell 1.89pc to 318.51 million shares while the traded value increased 10.52pc to Rs20.88bn day-on-day.

Published in Dawn, March 12th, 2025