Stocks fall on policy rate status quo
Pakistan Stock Exchange (PSX) on Tuesday closed modestly lower by 179 points, which analysts attributed to thin trade and investor caution following the State Bank of Pakistan's (SBP) decision to keep policy rate on hold amid inflationary pressures, price volatility and external account challenges.
Despite a surge in the latter half fuelled by robust remittances, global equity sell-off, a weak rupee and uncertainty surrounding the International Monetary Fund (IMF) review dampened investor sentiment.
According to Ahsan Mehanti of Arif Habib Corp, stocks closed lower amid thin trade after the SBP maintained the status quo in its key policy rate owing to the persistent core inflation, price volatility and external account pressures.
He said that late-session support emerged in the wake of upbeat data showing $3.1 billion in remittances, a surge of 40% year-on-year in February 2025. Global equity sell-off on US recession worries, a weak rupee and uncertainty about the outcome of Pakistan-IMF talks played the role of catalysts in bearish close at the PSX, Mehanti added.
At the end of trading, the benchmark KSE-100 index recorded a decrease of 178.69 points, or 0.16%, and settled at 114,177.66.
In its market review, Topline Securities commented that the KSE-100 index witnessed a fierce tug of war between bulls and bears.
The market opened on a negative note, reacting sharply to the State Bank's decision to maintain the policy rate at 12%, despite a significant decline in inflation, it said. "This decision dampened investor sentiment, pushing the index to the intra-day low of 746 points."
However, the second half of the session saw a resurgence of buying interest. Market participants responded positively to speculation about possible clearance of the longstanding circular debt. The optimism propelled the index to the intra-day high of 129 points, Topline said.
The positive movement was primarily fuelled by Pakistan State Oil (PSO), Pakistan Petroleum, Oil and Gas Development Company (OGDC), Meezan Bank and Hub Power, which together contributed 425 points to the index. Conversely, UBL, Service Industries, Fauji Fertiliser Company and Engro Fertilisers pulled the index down by 210 points, it added.
Arif Habib Limited (AHL) remarked that the KSE-100 index saw an early decline to 113,600 points, following the SBP's decision to leave the policy rate unchanged, before a sharp recovery that brought the index in the green.
Some 26 shares rose while 70 fell with PSO (+6.67%), Pakistan Petroleum (+2.86%) and OGDC (+1.89%) contributing the most to index gains. On the flip side, Service Industries (-5.25%), Engro Fertilisers (-0.83%) and Systems Limited (-1.21%) were the biggest drags, it said.
"The key benchmark indices continue to indicate that accelerated gains are on the menu. The weekly objective remains to be 116,000 points," the brokerage house added.
JS Global analyst Muhammad Hasan Ather said that the KSE-100 witnessed a range-bound session, with the benchmark index settling at 114,178, down 179 points.
The decline followed the State Bank's decision to keep the policy rate unchanged, contrary to market expectations. Selling pressure was observed in key sectors including cement and banks, he said.
"Looking ahead, market volatility may persist due to the global protectionist policies and food price fluctuations. Investors should remain cautious and monitor economic indicators," Ather added.
Overall trading volumes decreased to 318.5 million shares compared with Monday's tally of 324.7 million.
Shares of 438 companies were traded. Of these, 132 stocks closed higher, 233 fell and 73 remained unchanged. The value of shares traded during the day was Rs22.9 billion.
Sui Southern Gas Company was the volume leader with trading in 26.4 million shares, gaining Rs1.58 to close at Rs37.03. It was followed by The Bank of Punjab with 22.1 million shares, gaining Rs0.04 to close at Rs13.16 and Worldcall Telecom with 18.1 million shares, falling Rs0.02 to close at Rs1.33. During the day, foreign investors sold shares worth Rs315.9 million, the NCCPL reported.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
7 hours ago
- Business Recorder
NA body orders urgent steps to end BISP staffing crisis
ISLAMABAD: The National Assembly Standing Committee on Poverty Alleviation and Social Safety ordered immediate action to resolve the Benazir Income Support Programme (BISP)'s staffing crisis, directing the Poverty Alleviation Ministry to urgently engage the Finance Ministry and lift the recruitment freeze hampering welfare operations. The committee ordered immediate action to resolve BISP's staffing crisis, directing the Poverty Alleviation Ministry to urgently engage the Finance Ministry and lift the recruitment freeze hampering welfare operations. The committee also expressed serious concern over the continuously resistance from commercial banks in opening accounts for beneficiaries, with Private Financial Institutions (PFIs) demonstrating marked preference for their conventional clients over welfare recipients. The committee met with Mir Ghulam Ali Talpur in the chair at the Parliament house on Friday. The committee was told that the BISP is facing a staffing crisis of a shortage of personnel at various levels. This shortage is impacting the programme's ability to effectively serve beneficiaries and manage its operations, leading to concerns about service delivery and potential hardships for those relying on BISP's assistance The secretary Ministry of Poverty Alleviation and Social Safety confirmed to the Committee that a draft National Poverty Alleviation Policy is ready for and they are currently awaiting provincial governments' feedback, with a federal-provincial Poverty Alleviation Coordination Council to be established upon final approval. Presiding over a contentious review of Pakistan's welfare system, Mir Ghulam Ali Talpur led committee members in exposing banking sector roadblocks to BISP implementation while demanding urgent reforms to protect vulnerable beneficiaries. The meeting commenced with an acknowledgment of the ministry's compliance with the committee direction from previous proceedings, while members expressed concerns regarding incomplete responses in the submitted compliance report, particularly concerning State Bank of Pakistan (SBP) and demanded that Ministry to take up this matter with SBP. In response, the secretary BISP provided detailed dual-track solution involving simultaneous physical BISP Sahulat and digital wallet account initiatives. He said that the physical account pilot would commence in Karachi on August 14, symbolically aligning with Independence Day to emphasise country's downtrodden women financial emancipation. He said that concurrently, a digital account system will utilise biometric verification (BVS) through CNIC-linked mobile SIMs, mandated by recent SBP policy reforms. Both pilots will operate for six months, with comprehensive evaluations expected by January 2026. The committee emphasised the necessity of beneficiary orientation programmes, particularly, in underserved regions, to ensure effective adoption of these financial mechanisms. The committee raised questions regarding BISP's role in addressing the humanitarian crisis following recent building collapse in Karachi that left numerous poor women homeless. The secretary Ministry Poverty Alleviation and Social Safety and BISP clarified constitutional limitations, noting that housing and shelter interventions fall under provincial jurisdiction. The BISP advertisement budgetary transparency emerged as another critical discussion point, with committee members demanding detailed expenditure reports for BISP's media campaigns for the FY 2024-25 and current FY 2025-26, having found initial submissions insufficiently comprehensive. Operational challenges received considerable attention, including measures to address disbursement delays through enhanced two-factor authentication at payment campsites. Contractual enforcement emerged as a key concern, with the committee noting the termination of Habib Bank Limited's contract due to non-compliance and plans for similar and even more stricter penalties against such underperforming contracting private banks. The committee members also highlighted the outdated nature of the 2019 Multidimensional Poverty Index (MPI) data shared by Ministry of Planning Development and Special Initiatives, directing them to produce updated and comparative analysis of the metrics in the next meeting. The committee was informed by the Pakistan Poverty Alleviation Fund (PPAF) about their foreign-funded projects worth Rs11.7 billion that are currently operating across 253 union councils, covering diverse initiatives from livestock value chains to micro-hydel and nutritional programmes. It is pertaining to mention here that the projects are focusing on poverty reduction and sustainable development in Pakistan. These projects, supported by organizations like the European Union and the Kreditanstalt für Wiederaufbau(KfW), target diverse areas such as agriculture, rural development, and access to energy. The Kfw is a German state-owned development bank, originally established after World War II. The KfW supports various development goals, including those related to climate action, energy efficiency, and sustainable development. The committee was briefed on the continuation of the National Poverty Graduation Programme with new donor agency, now expanded to include five additional districts alongside the original twenty, though procedural issues have temporarily excluded it from PSDP allocations. This comprehensive session underscored the committee's commitment to rigorous oversight of social safety initiatives while highlighting both institutional progress and systemic challenges requiring continued attention. Copyright Business Recorder, 2025
Business Recorder
7 hours ago
- Business Recorder
Pakistan reaffirms commitment to GSP+
ISLAMABAD: Prime Minister Shehbaz Sharif on Friday underscored the European Union's status as one of Pakistan's foremost trading partners and reaffirmed the government's commitment to the Generalised Scheme of Preferences Plus (GSP+), describing it as a mutually beneficial arrangement. The prime minister, during a meeting with the outgoing Ambassador of the European Union to Pakistan, Dr Riina Kionka – who paid a farewell call as she concluded her diplomatic tenure – acknowledged her contributions to strengthening Pakistan-EU relations. Extending his felicitations to Ambassador Kionka on the successful completion of her assignment, Sharif appreciated her efforts in enhancing Pakistan-EU relations. GSP plus status: EU review puts Pakistan's duty-free export to the test amid reforms push He also acknowledged the European Union's timely assistance during the devastating floods of 2022, and lauded the ambassador's role in mobilising support. The prime minister conveyed his warm regards to the EU President, Ursula von der Leyen, and expressed his desire to meet her in the near future to further deepen bilateral engagement. The Interaction also included discussions on domestic political developments and the broader trajectory of Pakistan-EU relations. Ambassador Kionka expressed her gratitude to the prime minister and the government for the support extended to her during her tenure. She reaffirmed the EU's commitment to advancing its partnership with Pakistan, and stated that she would continue to advocate for strong bilateral ties in her upcoming role in Brussels. Copyright Business Recorder, 2025
Business Recorder
8 hours ago
- Business Recorder
PIDE holds seminar: Country's macro-economic indicators show signs of improvement
ISLAMABAD: Economists at a seminar while highlighting key economic challenges of Pakistan have said that the country's macroeconomic indicators have shown signs of improvement, such as declining inflation which is below five percent and a recent upgradation of credit rating by S&P from CCC+ to B-. Speaking at an event organised by Pakistan Institute of Development Economics (PIDE) here on Friday, they, however, emphasised the need to transition from mere stabilisation to robust growth to benefit the common people. The event brought together senior officials from the Ministry of Planning, Development and Special Initiatives, researchers, and economists to engage in a rigorous policy discussion. Speaking on the occasion, Dr Haider Ali explained that the seminar aimed to deliberate on aligning short-term macroeconomic stabilisation efforts with long-term sustainable growth strategies under the URAAN Pakistan framework. URAAN Pakistan is a strategic initiative by the Planning Commission built on the '5Es': Exports, E-Pakistan (digitalization), Environment, Energy, and Equity. Dr Khurram Ejaz presented a comprehensive overview of the current economic context and proposed strategies to move towards a stable growth path under URAAN Pakistan. He noted that Pakistan's economy has faced a multitude of external and internal shocks, including post-pandemic disruptions, the Russia-Ukraine conflict, and the devastating 2022 floods. These factors pushed the country toward fiscal and balance-of-payment crises, culminating in the signing of an Extended Fund Facility (EFF) with the IMF in September 2024. The IMF programme emphasised restoring macroeconomic stability through fiscal tightening, monetary policy, and external sector stabilisation. While it succeeded in curbing inflation and modestly reviving growth estimated at 2.7 percent, it limited the fiscal space for development spending capped at 2.6 percent of GDP. Dr Ejaz contrasted this with the ambitious targets of URAAN Pakistan, which envisions 6 percent GDP growth by 2029 with significantly higher employment generation. He acknowledged a critical financing gap between what is possible under the IMF framework and what URAAN Pakistan aspires to achieve. He proposed following five initial strategies to bridge this gap: (i) repositioning Development Finance Institutions (DFIs) to fulfill their core mandate rather than investing in low-risk securities; (ii) migrating suitable PSDP projects to Public-Private Partnership (PPP) mode to crowd in private capital; (iii) issuing diaspora, green, and SDG-linked bonds to unlock innovative financing; (iv) devolving social sector expenditures to provinces in a phased manner, and (v) reducing losses from state-owned enterprises (SOEs) and monetising non-strategic public assets such as ports under a structured asset recycling programme. Dr Nasir Iqbal questioned the underlying assumption that low growth is due to limited PSDP spending and argued that productivity, export orientation, and youth engagement are more critical to sustained growth than merely increasing public investment. He recommended establishing village-level economic zones, leveraging idle public infrastructure, and simplifying business registration to boost local entrepreneurship. Dr Karim Khan emphasized that IMF programmes and growth are not inherently contradictory and that sustainable growth must be private sector-led. He urged leveraging CPEC Phase-II and capitalising on productive investment avenues. Dr Shujaat Farooq added that governance reform and performance-based budgeting are crucial. He highlighted a disconnect between planning and finance ministries and stressed the need to engage provinces, whose PSDPs now exceed the federal government's in size. Dr Muhammad Zeshan noted the inefficiencies within PSDP allocations and tariff structures that perpetuate rent-seeking and protect low-productivity sectors. He advocated enabling emerging industries such as halal meat exports, seafood, and IT, and preparing for the Fourth Industrial Revolution through digitization, cloud infrastructure, and robotics. Shaaf Najib questioned the long-term impact of PSDP spending, citing studies that showed limited sustainability. He called for improving PSDP efficiency, prioritizing completed projects, and redirecting funds toward sectors with higher fiscal multipliers. Dr Mehmood Khalid appreciated the absence of tax rhetoric in the presentation but criticised the lack of growth diagnostics and the absence of evidence from existing research. He emphasised grounding all strategies within the URAAN Pakistan 5Es and aligning projections with realistic economic modeling. Dr Iftikhar echoed these sentiments, warning against public investment that crowds out private sector liquidity and highlighting inconsistencies in SEZ policies, HEC funding, and NFC allocations. Copyright Business Recorder, 2025
