Surprise rate hike pushes PSX to close week in red

Trading on the stock exchange commenced on a negative note in the outgoing week amid a surprising policy rate hike by the central bank, which increased the benchmark rate by 100 basis points to 16 per cent. The negative mood was reinforced by rising political noise. Arif Habib Ltd said the momentum briefly turned green after the State Bank of Pakistan (SBP) received $500 million from Asian Infrastructure Investment Bank. That led the rupee to appreciate during the week against the greenback by 0.11pc to settle at 223.69. However, the trading mood shifted back to the negative zone after official data depicted an increase in the trade deficit by 24pc on a monthly basis in November. Headline inflation in November also clocked in at 23.84pc, slightly higher from the preceding month’s reading. Furthermore, the SBP’s foreign exchange reserves data showed a decline of $327m on a weekly basis. As a result, the benchmark index of the Pakistan Stock Exchange closed at 42,150 points after shedding 787 points or 1.8pc from a week ago. Sector-wise, negative contributions came from cement (243 points), technology (101 points), fertiliser (83 points), exploration and production (70 points) and banking (62 points).