- The KSE-100 index closed at 115,042.25, down 802.56 points.
- Investors remain cautious ahead of the MPC meeting on January 27.
- The benchmark index hit an intraday low at 115,109.07 following profit-taking.
Stocks ended lower on Tuesday in a volatile session as investors opted for profit-taking ahead of the central bank’s monetary policy announcement scheduled for January 27, amid expectations of a reduction of 250 basis points (bps) in the interest rate.
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 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, down 1,101 .1 points or 0.95%.
The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) will deliberate on the economic outlook and determine the policy rate on Monday, while SBP Governor Jameel Ahmad will announce the committee’s decision during a press conference later today.
Investors are cautious ahead of the monetary policy announcement, while recent electricity cost reductions and tax reform plans provide some optimism.
According to Newsformer central bank governor Tariq Bajwa hopes the SBP will cut the policy rate by up to 2.5 percent, from 13 percent to 10.5-11 percent.
At the latest MPC meeting on December 16, the central government lowered its policy rate by 200 basis points to 13%, its fifth consecutive reduction since June, as part of its efforts to revive a sluggish economy with a slowdown in inflation.
In total, the central bank reduced its rates by 900 basis points in 2024, even more than during the 2020 pandemic, when it reduced its rates by 625 basis points in one year.
In its statement last month, the bank said it expected average inflation to be “significantly lower” than its previous forecast range of 11.5% to 13.5% in 2025.
Meanwhile, the International Monetary Fund (IMF) has revised its GDP growth forecast for Pakistan to 3% for 2025, from an earlier forecast of 3.2%. The IMF cited continuing economic challenges and uncertainty.
The Monetary Policy Committee (MPC) of the SBP is scheduled to meet on January 27 to decide on the policy rate. Expectations of a possible rate cut, driven by falling inflation, are providing some support to the stock market.
On Monday, the KSE-100 index gained 572.73 points, or 0.5 percent, to close at 115,844.82, supported by investor optimism over a possible rate cut and improving data of the current account.