A volatile session was witnessed on the Pakistan Stock Exchange (PSX) on Tuesday as the benchmark KSE-100 index closed down over 1,300 points but after briefly crossing the 117,000 level early in the negotiation session.
A mixed trend was observed in the stock market with the benchmark KSE-100 index hitting an intraday high of 117,039.17.
However, profit-taking erased all gains, and the index hit an intraday low of 113,688.54.
At the close, the benchmark index closed at 114,860.68, a decline of 1,308.73 points or 1.13%.
Sales were seen in key sectors including oil and gas exploration companies, OMC, power generation, fertilizers, cement, chemicals and automobile assemblers. While purchasing interest was observed in commercial banks.
High index energy stocks including MARI, OGDC, PPL and PSO were trading in the red, while banking stocks including HBL, MCB, MEBL, UBL and NBP were trading in the green.
The market sentiment comes as the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) reduced the key policy rate by 200 basis points to 13%. This is the fifth consecutive cut since June 2024, when the rate stood at 22%.
“At its meeting, the Monetary Policy Committee (MPC) decided to cut the policy rate by 200 basis points to 13%, effective December 17, 2024,” the MPC said in its statement.
“Headline inflation decreased to 4.9% year-on-year in November 2024, in line with MPC expectations. This slowdown was primarily due to the continued decline in food inflation as well as the phasing out of the impact of the gas rate increase in November 2023.
“However, the Committee noted that core inflation, at 9.7%, is proving sticky, while consumer and business inflation expectations remain volatile. To this end, the Committee reiterated its previous assessment that inflation may remain volatile in the short term before stabilizing within the target range.”
The selling pressure comes when the market had factored in a 200 basis point cut and there were no surprises in the MPC announcement.
However, on Monday, the benchmark KSE-100 index rose above 116,000 for the first time in history with a gain of almost 1,900 points or 1.7% in anticipation of the MPC meeting.
Internationally, Asian stocks rose and the dollar held firm on Tuesday as traders prepared for a series of central bank meetings this week in which the U.S. Federal Reserve is likely to cut rates and the Bank of Japan holds firm for now.
Bitcoin, the largest and best-known cryptocurrency, held near the record high of $107,821 it hit on Monday.
In the stock markets, the Australian market rose 0.75%, the Japanese Nikkei rose 0.26% and Taiwanese technology stocks rose 0.5%.
That left MSCI’s broadest index of Asia-Pacific shares outside Japan up 0.18%.
