Pakistan Stock Exchange faces drop amid MPC decision uncertainty

The Pakistan Stock Exchange (PSX) witnessed a significant drop on Monday as investors reacted to uncertainty surrounding the Monetary Policy Committee's decision. The benchmark KSE-100 index started strong, reaching an intra-day high of 73,300.75 before falling by 1,047.71 points or 1.44 percent to close at 71,695.03 points. The MPC decided to maintain the benchmark policy rate at 22%, citing high inflation levels and geopolitical uncertainties affecting commodity prices. The market optimism earlier in the day was driven by expectations of a potential interest rate cut during the MPC meeting.

Despite a choppy session, the market rebounded with a strong start, achieving a new all-time high. Various sectors played a significant role in this performance: Fertilizer added 386 points, commercial banks contributed 174 points, the power sector provided 112 points, and cement added 93 points. This collective effort reversed the previous negative trend and boosted market sentiment.

Looking back, the stocks closed near 73,000 points the previous week due to late-session buying, resulting in a 1% gain. The positive news flow regarding future talks with the International Monetary Fund for a new program also contributed to the market's upward trend. Analysts are closely monitoring the market dynamics, especially in anticipation of potential developments in the upcoming Federal Budget that could impact near-term inflation outlook.