PSX ignores rate cut positivity

Express Tribune

06-05-2025

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The Pakistan Stock Exchange (PSX) closed in negative territory on Tuesday as investor sentiment weakened despite a policy rate cut by the State Bank of Pakistan (SBP).
The move, aimed at easing monetary conditions, failed to satisfy market expectations for a deeper reduction, especially in light of rising geopolitical tensions and global uncertainty.
The index opened on a strong note, however, the rally proved short-lived as markets reversed course following mounting concerns over India-Pakistan tensions and international risks tied to trade tariffs and regional instability.
Investor caution was further exacerbated by a statement from Moody's, which warned that sustained political tensions between Pakistan and India could undermine the country's economic stability.
The credit rating agency highlighted risks to Pakistan's external financing needs and foreign reserves, particularly in the context of ongoing Kashmir dispute.
According to Arif Habib Corp MD Ahsan Mehanti, stocks closed lower as the SBP's policy easing, amid India tensions and global uncertainty over trade tariffs and geopolitical risks, failed to satisfy industry calls for a deeper rate cut.
Besides, Moody's caution over the possibility of Pakistan-India tensions derailing economic stability may risk external financing and foreign reserves were the catalysts for the bearish close at the PSX.
At the close of trading, the benchmark KSE-100 index recorded a substantial decline of 533.73 points, or 0.47%, and settled at 113,568.51.
Topline Securities wrote in its review that though trading opened on a buoyant note following much-anticipated 100basis points policy rate cut enthusiasm that pushed benchmark index to an intraday high of 990 points, the celebrations were short-lived.
As the day progressed, profit-taking emerged across key sectors, gradually eroding the morning gains. It attributed reversal in market trajectory to Pak-India tensions.
Key stocks that provided upward support included Pakistan Petroleum Limited, Oil and Gas Development Company, Pakistan State Oil, United Bank, and Systems Limited, which cumulatively contributed 275 points to the index.
On the other hand, notable laggards were Lucky Cement, Habib Metropolitan Bank, The Hub Power Company, Engro Fertiliser, and Bank Al-Habib collectively shaved 427 points, added Topline.
In its commentary, Arif Habib Limited (AHL) observed that early gains failed to hold at the 115,000 point level.
Some 39 shares rose while 58 fell, with Pakistan Petroleum Limited (+2.24%), Oil and Gas Development Company (+1.35%) and PSO (+2.07%) contributing the most to index gains.
The AHL noted that the larger than expected rate cut by the SBP failed to excite the market, with Pak-India tensions still a strong hindrance to upside.
Echoing similar view, JS Global Analyst Muhammad Hasan Ather in his comment wrote that today's rally was fuelled by the SBP's 100 basis point rate cut to 11%. He anticipated lower borrowing costs may support corporate earnings, particularly in banking, cement, and auto sectors.
Overall trading volumes increased to 420.6 million shares compared with Monday's tally of 399.5 million.
Shares of 453 companies were traded. Of these, 188 stocks closed higher, 218 fell and 47 remained unchanged.
Sui Southern Gas Company was the volume leader with trading in 54.3 million shares, falling Rs3.95 to close at Rs36.08. It was followed by K-Electric Limited with trading in 42.3 million shares, gaining Rs0.22 to close at Rs4.38 and Dewan Cement Limited with 26.2 million shares, falling Rs0.29 to close at Rs10.46.
During the day, foreign investors bought shares worth 263 million, the National Clearing Company of Pakistan Limited (NCCPL) reported