KARACHI: The KSE-100 index closed higher by 447.43 points, or 0.32 per cent, at 138,412.25 on Wednesday, following a volatile session driven by speculation over the central bank’s monetary policy decision. The index fluctuated between an intraday high of 139,018.88 and a low of 137,658.81.

Early trading witnessed selling pressure from leveraged investors amid uncertainty over a potential interest rate cut. However, sentiment shifted after the State Bank of Pakistan (SBP) surprised the market by keeping the policy rate unchanged at 11pc in its latest Monetary Policy Committee (MPC) meeting — contrary to market expectations of a 50-100 basis point reduction.

The announcement triggered renewed interest in the banking sector, with heavyweight stocks such as United Bank, Habib Bank, and Systems Ltd contributing a combined 481 points to the index. In contrast, major laggards — Fauji Fertiliser, Lucky Cement, Engro Corporation, Maple Leaf Cement, and DG Khan Cement — together shaved off 303 points.

Ali Najib, Deputy Head of Trading at Arif Habib Ltd, said the SBP had “shocked the street” by maintaining the policy rate. He added that the central bank emphasised the need for continued prudent monetary and fiscal policies, along with structural reforms, to preserve macroeconomic stability and support sustainable growth.

The market initially reacted negatively to the SBP’s decision, slipping into the red and hitting an intraday low of 137,659 — down 306 points or 0.22pc. However, strong buying interest in blue-chip banking stocks helped the index recover and close on a positive note.

Trading activity, however, remained subdued. The total traded volume dropped 29.76pc to 425.83 million shares, while the traded value declined 23.5pc to Rs24.9bn. Bank of Punjab led the volume chart, with 24.8 million shares changing hands.

Analysts said the KSE-100 may test the 137,000 level again in the coming sessions — a key support zone. If breached, the index could slip towards 135,000, where lower valuations and expectations of monetary easing could trigger renewed buying.

Ahsan Mehanti of Arif Habib Corporation said the market’s recovery was supported by investor optimism over future policy easing, strong corporate results, rising global equity markets, firm international oil prices, and stability in the rupee due to SBP’s continued vigilance.

Published in Dawn, July 31st, 2025