Karachi, December 17, 2024 – The benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) experienced a significant decline on Tuesday, shedding 1,308 points or 1.13% as selling pressure mounted following the announcement of the policy rate cut by the State Bank of Pakistan (SBP).
The KSE-100 index closed at 114,861 points, down from the previous day’s historic high of 116,119 points. During the trading session, the index displayed a mixed trend, reaching an intra-day high of 117,039.17 points before profit-taking pulled it down to an intra-day low of 113,688.54 points.
The selling pressure was widespread, impacting major sectors such as oil and gas exploration, oil marketing companies (OMCs), power generation, fertilizers, cement, chemicals, and automobile assemblers. Conversely, buying interest was noted in the commercial banking sector.
Index-heavy energy stocks, including MARI, OGDC, PPL, and PSO, recorded losses, while banking stocks such as HBL, MCB, MEBL, UBL, and NBP closed in the green.
The market’s reaction followed the Monetary Policy Committee’s (MPC) decision to cut the policy rate by 200 basis points, bringing it down to 13%. This marks the fifth consecutive reduction since June 2024, when the rate was at 22%. The new rate became effective on December 17, 2024.
In its statement, the MPC explained the rationale behind the rate cut: “Headline inflation declined to 4.9% year-on-year in November 2024, consistent with the MPC’s projections. This reduction was largely attributed to the continued decline in food inflation and the fading impact of the gas tariff hike implemented in November 2023.”
However, the MPC acknowledged persistent challenges, stating, “Core inflation remains sticky at 9.7%, and inflation expectations among consumers and businesses are volatile. Inflation may remain unpredictable in the near term before stabilizing within the target range.”
Tuesday’s decline followed Monday’s record-breaking session, where the index gained nearly 1,900 points (1.7%) to close above 116,000 points for the first time in history. The absence of surprises in the MPC’s announcement led investors to engage in profit-taking, erasing the previous day’s gains.