KARACHI: Pakistan Stock Exchange (PSX) Monday hit a tailspin as uncertainty over the State Bank of Pakistan's (SBP) monetary policy stance kept investors on tenterhooks sparking panic selling to cut possible losses, traders said.
After getting off to an otherwise flying start, the benchmark KSE-100 index lost 1,047.71 points or 1.44 percent, to settle at 71,695.03 points.
Earlier today, the bulls pushed the index above 73,000-mark shortly after the morning bell rang; however, a host of negative triggers sapped investors’ spirit.
SBP’s Monetary Policy Committee (MPC) kept the benchmark policy rate unchanged at 22%, highlighting that the level of inflation was still ‘high’, with the recent geopolitical events having added uncertainty about the outlook for the current bottomed-out commodity prices.
Moreover, measures in the upcoming Federal Budget may also have implications for the near-term inflation outlook. The MPC also noted that leading central banks in advanced economies were adopting a cautious policy stance after slowdown in disinflation there of late.
Speaking to Geo.tv,Intermarket Securitiesdirector research CFAMuhammad Saad Ali said that the market optimism is being driven by expectations of an interest rate cut in todays Monetary Policy Committee (MPC) meeting of up to 100bps.
Moreover, positive news flow on future talks with the International Monetary Fund (IMF) for a new programme is also driving the market, he added.
The stocks closed near 73,000 points last week on Friday owing to the late-session buying which fuelled a 1% gain, said the dealers.
The benchmark KSE-100 index increased by 771.35 points or 1.07% to close at 72,742.75 points on Friday.
Analyst Muhammad Rizwan at Chase Securities said despite the choppy session experienced, "the market rebounded with a strong start and achieved a new all-time high".
"This impressive performance was driven by significant contributions from various sectors: Fertiliser added 386 points, Commercial banks contributed 174 points, the Power sector provided 112 points, and Cement added 93 points, collectively reversing the previous negative close and boosting market sentiment."