PSX ends bearish on rate hike fears, oil surge and political uncertainty
KARACHI (Commerce Reporter): The Pakistan Stock Exchange (PSX) witnessed a volatile session on Tuesday, ending on a bearish note for the second consecutive day despite opening on a positive note.
The benchmark KSE-100 Index opened higher on the back of early buying interest but failed to sustain the momentum as selling pressure emerged in the second half of the session. The index closed down by 348 points at 164,776 points. During the day, the index touched an intra-day high of 166,070 points and a low of 164,774 points, reflecting a volatile trading pattern.
Market volumes remained thin, with only 383.7 million shares worth Rs13.10 billion traded during the day. Out of 571 companies, prices of 223 companies increased while 226 declined and 122 remained unchanged, indicating a mixed but cautious market breadth.
Financial Expert Arsalan Ahmed told The Karachi Post that although the market opened positive, profit-taking at higher levels dragged the index down. He said the KSE-100 faced strong resistance near the 166,000 level, where investors opted to book profits.
He said multiple factors are weighing on investor sentiment, especially the expectations that the State Bank of Pakistan may increase the interest rate by 50 to 100 bps in the upcoming monetary policy review have made investors cautious.
“A potential rate hike is seen as negative for equities as it increases borrowing costs for companies and makes fixed income more attractive.” He added.
He noted that rising global geopolitical tensions and an uptick in international oil prices are creating uncertainty.
“Higher oil prices increase import bill and inflationary pressures for Pakistan, which is a net oil importer, and this impacts corporate earnings,” he articulated.
The domestic political turmoil is also impacting market confidence. Investors are concerned about political stability and its implications for economic reforms and continuity of policies.
Arsalan Ahmed further noted that foreign investors have been on the selling side, which has contributed to low volumes and lackluster activity. Foreign selling has put additional pressure on blue-chip stocks, he said.
He said that local investors are currently in a wait-and-see mode and are conscious about taking fresh positions.
“Investors are waiting for clarity on interest rate direction, corporate earnings announcements, and political developments before committing new funds.” He noted.
Overall, the analysts expect the market likely to remain range-bound and volatile in the near term until there is clarity on these key triggers.