Shares rally as SBP rate hike misses market expectations

Shares at the Pakistan Stock Exchange (PSX) continued to rise for the second straight day on Tuesday, with analysts attributing the bounce back to a lower-than-expected increase in the benchmark policy rate. The benchmark KSE-100 index gained 509.56 points, or 1.33 per cent, to reach 38,942.79 points at 9:56am. Intermarket Securities’ Head of Equity Raza Jafri said the index was reacting positively as the 100 basis points interest rate hike was widely expected and already incorporated. “Energy stocks are leading the rally on an expected circular debt plan,” he commented. Jafri noted that State Bank of Pakistan (SBP) Governor Jameel Ahmad also gave a detailed breakdown of the external debt retirement in the remaining months of FY23. “The funding gap appears manageable but the need for the IMF is very much evident. Failure to resume the IMF programme quickly may make today’s market rise fleeting only,” he said. Two other analysts who spoke to Dawn.com said the interest rate hike was below expectations which was the primary reason the KSE-100 index was rising.