The Pakistan Stock Exchange\u2019s benchmark KSE-100 index plunged over 800 points on Monday, with the sharp slump being attributed to the central bank\u2019s surprise move to hike the policy rate by 100 basis points on Friday evening.<\/p>\n
The index was down 856.67 points, or two per cent, to reach 42,080.06 points around 1:30pm.<\/p>\n
Head of Research at Intermarket Securities, Raza Jafri, said the market had opened sharply negative as it factored in higher interest rates and continued uncertainty on the political front after Imran Khan\u2019s threat to dissolve the Punjab and Khyber Pakhtunkhwa assemblies.<\/p>\n
\u201cSupport may come in later on, as positives such as Pakistan\u2019s intent to repay its maturing Sukuk ahead of schedule and the end to the long march, which risked street confrontation,\u201d he added.<\/p>\n
First National Equities Limited Director Amir Shehzad also said the market was under pressure due to the \u201cunexpected\u201d increase in the policy rate by 100 basis points.<\/p>\n
He suggested that investors should adopt the strategy of buying the dip \u2014 a term used for the purchase of an asset after it has dropped in price \u2014 as oil prices were decreasing in the international market.<\/p>\n
Moreover, he estimated that the increase in the policy rate was due to the \u201cIMF\u2019s (International Monetary Fund) pressure\u201d and that the \u201crelease of the next installment by the IMF would now be easier\u201d.<\/p>\n
\u201cInflows are also expected and things seem to be settling politically too,\u201d he said, adding that in such a scenario, buy-on-dip strategy would be suitable.<\/p>\n
The SBP raised its key policy rate by 100 basis points to a 24-year high of 16pc on Friday in a decision that went against market expectations but, according to the central bank, was \u201caimed at ensuring that elevated inflation does not become entrenched\u201d.<\/p>\n
The decision reflected the SBP monetary policy committee\u2019s (MPC) view that \u201cinflationary pressures have proven to be stronger and more persistent than expected\u201d, the central bank said in a statement after a committee meeting.<\/p>\n
The move brings the SBP interest rates hikes to 625 basis points this year.<\/p>\n","protected":false},"excerpt":{"rendered":"
The Pakistan Stock Exchange\u2019s benchmark KSE-100 index plunged over 800 points on Monday, with the sharp slump being attributed to the central bank\u2019s surprise move to hike the policy rate by 100 basis points on Friday evening. The index was down 856.67 points, or two per cent, to reach 42,080.06 points around 1:30pm. Head of […]<\/p>\n","protected":false},"author":2,"featured_media":255695,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-297959","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"yoast_head":"\n