Pakistan’s stock market remained under pressure on Tuesday, as investors continued to offload shares following an unexpected interest rate increase by the central bank.
The benchmark KSE-100 Index dropped more than 1,100 points during intraday trade, reflecting cautious sentiment across the market. By around 12:30pm, the index was hovering near 168,376, down about 0.66 percent from the previous close. It later showed a slight recovery but stayed firmly in the red.
Rate hike weighs on sentiment
The downturn comes a day after the State Bank of Pakistan raised its policy rate by 100 basis points to 11.50 percent. The move caught many investors off guard, as expectations had leaned towards a possible cut or at least no change.
Market participants said the higher borrowing cost is likely to slow economic activity and reduce corporate earnings, prompting a sell-off in equities. Analysts noted that investors may take time to adjust to the new interest rate environment.
Selling was visible across major sectors, including automobile assemblers, cement, fertiliser, oil and gas exploration, oil marketing companies and power generation. Heavyweight stocks such as HUBCO, MARI, OGDC, PPL, POL, LUCK and DGKC remained under pressure and dragged the index lower.
Activity remains mixed
Despite the overall decline, trading activity stayed strong, with volumes nearing 296 million shares by midday. The index moved within a narrow range, touching a high of around 169,314 and a low near 168,171 during the session.
Some stocks still posted gains. KML led the advancers with a double-digit increase, followed by DFSM and KOHE. On the other hand, AMBL and LSEFSL were among the biggest losers, each recording sharp declines.
Global cues offer limited support
International markets offered little direction. Asian shares hovered near record highs, while investors remained focused on central bank decisions and ongoing tensions in the Middle East.
Uncertainty around the conflict, particularly disruptions in the Strait of Hormuz, has kept global energy markets on edge. Meanwhile, major equity indices in the US and Asia showed only modest movements, limiting any positive spillover to local markets.
Back home, analysts expect volatility to continue in the short term as investors reassess their positions in light of tighter monetary policy.
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