KSE-100 drops 1,174 points amid cautious trading ahead of SBP rate decision

The Pakistan Stock Exchange (PSX) witnessed a subdued trading session on Monday as investors remained cautious ahead of the highly anticipated monetary policy announcement by the State Bank of Pakistan (SBP).

The benchmark index opened on a dull note and traded within a narrow range throughout the session, reflecting a clear wait-and-see approach across the board. Selling pressure persisted, dragging the index lower by 1,174.68 points (-0.69%), with the market eventually settling at 169,497.36.

During intraday trading, the index oscillated between a high of 171,306.62 and a low of 169,268.33, highlighting limited volatility despite the overall negative trend. Earlier in the session, at around 1:00pm, the index was hovering at 169,953.80, down 718.24 points (-0.42%), indicating steady pressure amid thin participation.

Market activity remained cautious, as investors largely refrained from taking aggressive positions ahead of clarity on the interest rate outlook. Broad-based selling was observed across key sectors, including automobile assemblers, cement, commercial banks, fertiliser, oil and gas exploration companies, and oil marketing companies (OMCs), which weighed heavily on overall market performance.

Besides, the uncertain outlook surrounding US-Iran peace talks and rising global oil prices—driven by continued disruptions and vessel traffic constraints in the Strait of Hormuz—also dampened investor sentiment. 

Later in the day, the SBP raised the policy rate by 100 basis points to 11.50%, up from 10.50%, reinforcing concerns over the cost of borrowing and future economic growth.

Following the rate hike, investor sentiment is expected to remain cautious, as higher borrowing costs could weigh on corporate earnings and overall economic activity. 
“Investors remain on the sidelines, awaiting clarity on the upcoming Monetary Policy Statement and further developments in the ongoing US–Iran conflict,” AKD Securities Director Research Mohammed Awais Ashraf told the Express Tribune.

“The KSE-100 index closed at 169,479 points, declining by 1,174 points (-0.69% DoD), in what turned out to be a mixed and range-bound session. Early direction remained unclear as the market oscillated between gains and losses, ultimately settling in the red amid cautious sentiment and lack of strong triggers,” KTrade Securities equity trader Ahmed Sheraz commented. 

Activity levels stayed relatively muted, with KSE-100 volumes clocking in at 357 million shares, reflecting selective participation rather than broad-based conviction as investors largely stayed on the sidelines.

On the macro front, rising oil prices continued to weigh on sentiment, primarily driven by the absence of any concrete breakthrough between the United States and Iran. Ongoing backchannel diplomacy remains in motion, with Iran’s Foreign Minister engaging across multiple fronts, including visits to Islamabad, Oman, and Russia.

Discussions around the Strait of Hormuz and broader strategic matters signal progress, but the pace remains slow, keeping global uncertainty elevated, he wrote,
Domestically, investor focus remained glued to the SBP’s monetary policy decision.

The announced 100basis points rate hike to 11.5% will add another layer of pressure, particularly on debt-sensitive sectors. While largely anticipated and somewhat priced in, the move is expected to weigh on cyclicals such as cement, while offering relative support to banking names over the medium term.

Sector-wise, commercial banks, cement, and oil & gas stocks faced selling pressure, with key negative contributions coming from United Bank, Oil & Gas Development Company, National Bank, Lucky Cement, Hub Power, and Maple Leaf Cement. 

Looking ahead, Sheraz maintained that the market is likely to remain in a consolidation phase, with near-term direction hinging on geopolitical developments and clarity on US-Iran negotiations. He advised investors to adopt a cautious stance, with preference to stay selective and avoid excessive exposure to cyclicals until visibility improves.