PSX drops 1,174 points on rate hike anxiety

KSE-100 settles at 169,497 as investors await clarity on interest rate outlook

KARACHI:

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

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. The index oscillated between a high of 171,306.62 and a low of 169,268.33. Selling pressure dragged the index lower by 1,174.68 points (-0.69%), with the market eventually settling at 169,497.36.

Market activity remained cautious, as investors largely refrained from taking aggressive positions ahead of clarity on the interest rate outlook. Besides, the uncertain outlook surrounding US-Iran peace talks and rising global oil prices, also dampened investor sentiment.

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). 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. "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.

"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 as investors largely stayed on the sidelines.

On the macro front, rising oil prices, amid a lack of US-Iran breakthrough, kept sentiment weak despite ongoing diplomacy. Domestically, investor focus remained on the SBP's monetary policy decision. The 100 basis point 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 and gas stocks faced selling pressure, with key negative contributions coming from United Bank, Oil and Gas Development Company (OGDC), National Bank of Pakistan (NBP), Lucky Cement, Hub Power and Maple Leaf Cement. Sheraz expects consolidation ahead, with direction tied to geopolitical developments and US-Iran talks, advising cautious, selective positioning and limited exposure to cyclicals until clarity improves.

According to Arif Habib Limited (AHL), no peace deal over the weekend saw the KSE-100 retreat 0.69% to 169.5k. Some 30 shares rose while 69 fell, with Habib Bank (+1.28%), Meezan Bank (+0.58%) and Thal Limited (+5.61%) contributing the most to index gains. In contrast, UBL (-1.54%), OGDC (-2.08%) and NBP (-3.52%) were the biggest index drags.

In a key development, the SBP raised its benchmark rate by 100 basis points to 11.5%, the first hike in nearly three years, as the US-Iran war fuels inflation pressures. In corporate news, Indus Motor (+2.87%) announced 9MFY26 earnings per share of Rs246.80, reflecting a 17% year-on-year increase, with a dividend of Rs148. During 3QFY26, EPS stood at Rs85.21 (+2% YoY) with DPS of Rs51. Askari Bank (+0.48%) posted 1QCY26 EPS of Rs4.54 (-8% YoY) and DPS of Rs2.

Meanwhile, the IMF may approve over $1.2 billion for Pakistan; despite rate hike pressure, Friday's low of 166.5k is expected to hold.

Overall trading volume decreased to 780.2 million from Friday's total of 1.19 billion. The value of traded shares stood at Rs33.4 billion. Shares of 483 companies were traded. Of these, 217 rose, 229 fell and 37 remained unchanged. The Bank of Punjab was the volume leader with trading in 126.7 million shares, losing Rs1.22 to close at Rs34.95. Foreign investors bought shares worth Rs3.61 million, the National Clearing Company reported.