Karachi, January 27, 2025 – The benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) recorded a sharp decline on Monday, shedding 1,360 points amid heavy selling pressure. The KSE-100 index closed at 113,520 points, down from last Friday’s closing of 114,880 points.
Analysts attributed the significant drop in the KSE-100 index to widespread selling across key sectors, as investors awaited the monetary policy decision by the State Bank of Pakistan (SBP). The decision, announced after the market’s close, revealed a 100 basis points cut in the policy rate, reducing it to 12%.
Selling pressure was evident across major sectors, including automobile assemblers, cement, chemicals, commercial banks, oil and gas exploration companies, OMCs, refineries, and power generation. Index-heavy stocks such as HUBCO, SNGP, SSGC, MARI, OGDC, PPL, MCB, MEBL, and UBL traded in the red, further dragging down the KSE-100 index.
“The key event today was the Monetary Policy Committee (MPC) meeting, with market consensus expecting a 100bps cut to bring the policy rate to 12%,” noted Intermarket Securities. “Recent T-Bill auctions have seen short-term yields fall below 11.5% while the policy rate stood at 13%. A larger-than-expected cut could act as a positive trigger. Post-MPC, the market’s focus will shift to political developments and the corporate results season, particularly expectations of large dividends from some banks and fertilizer stocks.”
The KSE-100 index had shown a mixed trend during the previous week as investors remained cautious, avoiding new positions due to uncertainties surrounding amendments to the tax bill affecting non-filers. These changes negatively impacted market sentiment, contributing to the week’s volatility.
On a week-on-week basis, the KSE-100 index declined by 391.59 points, closing last week at 114,880.49 points. The uncertainty over fiscal and political developments weighed heavily on investor confidence, leading to reduced activity in the market.
Monday’s significant drop in the KSE-100 index highlights the sensitivity of market sentiment to key economic events, including monetary policy decisions. While the SBP’s policy rate cut may provide long-term relief for businesses, short-term volatility remains a challenge for the KSE-100 index. Investors will now closely watch political developments and corporate earnings announcements, which could influence the KSE-100 index’s trajectory in the coming weeks.
