PSX retreats as investors await SBP policy signal

• KSE-100 Index closed at 137,964.81 points, down 1.02%.
• Index touched intraday low of 137,636.37, dropping 1.25%.
• Session's high recorded at 140,331.01, up 950.96 points, or 0.68%.

The equity market fell on Tuesday as investors opted to lock in profits ahead of the State Bank of Pakistan’s (SBP) upcoming monetary policy announcement, scheduled for Wednesday.

The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index settled at 137,964.81 points, down 1,415.24 points, or 1.02%, from the previous close of 139,380.05.

During the session, the index climbed to an intraday high of 140,331.01, gaining 950.96 points, or 0.68%, before sliding to a low of 137,636.37, reflecting a drop of 1,743.68 points, or 1.25%.

“Profit taking seems to be setting in at 140,000, where some investors are optimistic about another rate cut, while some are taking a cautious stance before the monetary policy announcement tomorrow,"said Ahfaz Mustafa, CEO of Ismail Iqbal Securities.

"The uncertainty will end after tomorrow's policy [announcement] and the statement of the SBP which will set the tone for future policy action,” he added.

The Monetary Policy Committee (MPC) is scheduled to meet on July 30 to set the benchmark interest rate. Analysts are divided on whether the SBP will initiate a fresh rate cut amid falling inflation and a stable exchange rate.

Meanwhile, Pakistan and the United States continued discussions on tariff concessions on Monday. The talks marked the second engagement within three days following Deputy Prime Minister Ishaq Dar’s meeting with US Secretary of State Marco Rubio in Washington on July 25. The Foreign Office said both sides reviewed key bilateral issues including tariffs and regional developments.

Finance Minister Muhammad Aurangzeb has departed for the US to finalise the agreement, which Pakistan hopes to conclude within days. The tariffs, initially scheduled to take effect this month, have been deferred until August to provide space for negotiations. The US remains Pakistan’s top export destination, accounting for roughly $5 billion in trade.

According to the Ministry of Finance’s Monthly Economic Outlook, headline inflation for July is projected to ease to between 3.5% and 4.5%, driven by stable energy prices, exchange rate gains, and robust supply chains. The report also estimated full-year inflation at 4.49% — a nine-year low — down from 23.4% the previous year.

Pakistan’s GDP growth is projected at 4.2%, buoyed by an agricultural rebound and steady improvements in manufacturing and external accounts. 

The report noted that large-scale manufacturing (LSM) rose 0.2% year-on-year over the first eleven months of FY2024, while exports increased by 11.7% in June to $2.75 billion. Imports surged 25.8% to $5.2 billion during the same period.

Pakistan posted a current account surplus of $491 million in June and an annual surplus of $2.1 billion in FY25—its first in 14 years and the largest in over two decades. 

The agriculture sector continues to show strong performance due to improved water availability, fertiliser usage, and increased agri-credit disbursement.

On Monday, the benchmark KSE-100 Index increased by 172.77 points, or 0.12%, to 139,380.06 points from 139,207.29 points recorded in the last session. The highest index of the day remained at 140,149.23 points, while the lowest level was recorded at 139,195.85 points.