PSX reacts to surprise rate hike, plunges over 800 points

Published
27
A snapshot of trading activity at the Pakistan Stock Exchange on Monday. — Photo via PSX website
A snapshot of trading activity at the Pakistan Stock Exchange on Monday. — Photo via PSX website

The Pakistan Stock Exchange’s benchmark KSE-100 index plunged over 800 points on Monday, with the slump being attributed to the central bank’s surprise move to hike the policy rate by 100 basis points on Friday evening.

The index saw a sharp slump right after the opening bell, dropping more than 600 points to 42,282.48 in the first 30 minutes of trading. It eventually closed at 42,071.34, down 865.39 points or 2.02pc.

Head of Research at Intermarket Securities, Raza Jafri, said the market had opened sharply negative as it factored in higher interest rates and continued uncertainty on the political front after Imran Khan’s threat to dissolve the Punjab and Khyber Pakhtunkhwa assemblies.

“Support may come in later on, as positives such as Pakistan’s intent to repay its maturing Sukuk ahead of schedule and the end to the long march, which risked street confrontation,” he added.

First National Equities Limited Director Amir Shehzad also said the market was under pressure due to the “unexpected” increase in the policy rate by 100 basis points.

He suggested that investors should adopt the strategy of buying the dip — a term used for the purchase of an asset after it has dropped in price — as oil prices were decreasing in the international market.

Moreover, he estimated that the increase in the policy rate was due to the International Monetary Fund’s (IMF) “pressure” and that the “release of the next installment by the IMF would now be easier”.

“Inflows are also expected and things seem to be settling politically too,” he said, adding that in such a scenario, buy-on-dip strategy would be suitable.

The SBP raised its key policy rate by 100 basis points to a 24-year high of 16pc last week in a decision that went against market expectations but, according to the central bank, was “aimed at ensuring that elevated inflation does not become entrenched”.

The decision reflected the SBP monetary policy committee’s (MPC) view that “inflationary pressures have proven to be stronger and more persistent than expected”, the central bank said in a statement after a committee meeting.

The move brings the SBP interest rates hikes to 625 basis points this year.

Follow Dawn Business on X, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Fixing bond markets
Updated 01 Oct, 2026

Fixing bond markets

Pension funds, insurance companies, mutual funds, retail investors, and eventually, foreign investors must become bigger participants in the market.
Call centre rackets
01 Oct, 2026

Call centre rackets

A NUMBER of recent raids conducted by the authorities in different cities point to the growing threat fraudulent ...
Homeward bound
01 Oct, 2026

Homeward bound

FIVE months after Somali pirates captured an oil tanker carrying a 19-member multinational crew, Somali maritime...
Kashmir unresolved
Updated 30 Sep, 2026

Kashmir unresolved

The just solution lies in India addressing the issue through a trilateral dialogue involving the legitimate representatives of the Kashmiri people and Pakistan.
Water shortage
30 Sep, 2026

Water shortage

THAT the country is entering the Rabi season with an anticipated water shortage of nearly 25pc, the lowest carryover...
Young hearts
30 Sep, 2026

Young hearts

THE observance may have passed, but the message of World Heart Day should not fade with it. The occasion is a useful...