PSX drops by 850 points, rupee continues to slide

Domestic capital markets expect a further hike in key policy rate by central bank to control rising inflation

KARACHI:

The Pakistan stock market slumped on Tuesday along with record rupee depreciation, as domestic capital markets expect a further hike in the key policy rate by the central bank to control rising inflation.

Pakistan Stock Exchange's (PSX) benchmark KSE-100 Index dropped around 1.6%, or 850 points, to 46,625 points at about 2pm on Tuesday.

The decline is seen after Pakistani currency posted a fresh loss of around Rs1 to a new record low near Rs303 against the US dollar at midday.

Earlier, PSX hit a six-year high at over 48,600 points in the first week of August.

Pak-Kuwait Investment Company Head of Research Samiullah Tariq said the market was going down amid "expectation of an increase in interest rates".

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Topline Securities CEO Muhammad Sohail said the market faces selling pressure due to the "falling rupee and lower than expected June financial result".

Market talk suggests that the economic, social and political unrest is weighing on capital markets.

The ongoing protests by the business community and domestic consumers against inflated power bills, rising inflation, and a likely hike in SBP interest rate continue to impact the economic outlook.

The situation is impacting the income of companies listed on the PSX, forcing some investors to sell stocks at falling prices.