The capital market posted losses on Tuesday, driven by conflicting economic signals, profit-taking pressures, and ongoing policy deliberations.
The KSE-100 Index ended the day at 115,042.25, reflecting a decline of 802.56 points, or -0.69%, from the previous close of 115,844.81.
The State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) will deliberate on the economic outlook and determine the policy rate on Monday, while SBP Governor Jameel Ahmad will announce the committee’s decision at a press conference later the same day.
The benchmark index started the day positively, rising 580.04 points, or 0.5%, to touch an intraday high of 116,424.85 before falling to 115,109.07, a decline of 1,101.1 points or 0.95%.
Investors are cautious ahead of the monetary policy announcement, while recent electricity cost reductions and tax reform plans offered some optimism.
According to The News, former central bank governor Tariq Bajwa hopes the SBP to decrease the policy rate by two and a half percent from 13% to 10.5-11%.
In the last MPC meeting on December 16, the central cut its key policy rate by 200 basis points to 13%, its fifth straight reduction since June as part of its efforts to revive a sluggish economy with inflation easing.
Cumulatively, the central bank has cut rates by 900 basis points during 2024, even higher than during the pandemic in 2020 when it cut 625 basis points in a year.
The bank in its last month’s statement noted that it expected inflation to average “substantially below” its earlier forecast range of 11.5% to 13.5% in 2025.
Meanwhile, the International Monetary Fund (IMF) revised its GDP growth forecast for Pakistan to 3% for 2025, down from an earlier projection of 3.2%. The IMF cited ongoing economic challenges and uncertainty.
The SBP’s Monetary Policy Committee (MPC) is set to meet on January 27 to decide the policy rate. Expectations of a potential rate cut, spurred by easing inflation, provide a degree of support to the equity market.
On Monday, the KSE-100 Index gained 572.73 points, or 0.5%, to close at 115,844.82, supported by investor optimism over a potential rate cut and improved current account data.
