The Pakistan Stock Exchange (PSX) experienced a steep decline, with the KSE-100 Index plunging by 3.3%, closing at 111,070.29 points.
The trading session began on a positive note as the KSE-100 Index gained 1,376.02 points, or 1.2%, reaching an intraday high of 116,236.7. However, the market faced a sharp downturn, dropping to an intraday low of 110,896.27 before closing with a historic single-day decline of 3,790.39 points.
A total of over 506 million shares were traded, valued at approximately 45.7 billion Pakistani rupees.
The significant drop, attributed to various economic and political pressures, has heightened investor concerns. The trading halt offers a brief respite as market participants await further developments.
SBP Reduces Policy Rate by 200 Basis Points
The State Bank of Pakistan (SBP) has continued its monetary easing strategy, cutting the policy rate by 200 basis points to 13%. The decision comes in light of a drop in headline inflation, which fell to 4.9% in November, and improved economic growth prospects.
Announced by the Monetary Policy Committee (MPC) and effective from December 17, 2024, this marks the fifth consecutive rate cut of the year, resulting in a cumulative reduction of 900 basis points in 2024.
“The Monetary Policy Committee decided to cut the policy rate by 200 basis points to 13%, effective December 17, 2024,” the SBP stated, adding that inflation trends aligned with its expectations.
Analysts highlighted that the decline in food inflation and the fading effects of prior gas tariff hikes contributed to the reduced inflation. “This year has seen unprecedented monetary easing, with a cumulative 900bps rate cut,” noted Tahir Abbas, Director of Equities at AHL.
Despite the positive inflation trends, the MPC acknowledged the persistence of core inflation, which remains at 9.7%. Consumer and business inflation expectations also remain volatile. Inflation is projected to average 8-9% in the coming months, potentially slowing the pace of further rate cuts.
