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PSX wobbles as IMF agreement news fails to prop-up market

The market lost 797 points during trading

SAMAA | - Posted: Nov 23, 2021 | Last Updated: 1 week ago
Posted: Nov 23, 2021 | Last Updated: 1 week ago

Photo: File

For the past two months, the investors in the Pakistan Stock Exchange (PSX) were hoping that the bandage of a positive IMF agreement news will heal the bleeding stock market. 

However, despite the news of an agreement between Pakistan and the International Monetary Fund (IMF), the market is not showing the signs of recovery as expected. 

On Tuesday, the market shed almost 800 points and the benchmark KSE-100 index fell beyond the 45,000 points-limit. At the start of the trading Tuesday, the index was at 45,745 points. As the session progressed, the loss-recovery cycle continued with the index closing at 44,948 points at 4pm. 

According to economic expert Adnan Sami Sheikh, the decision by the State Bank of Pakistan (SBP) to increase the interest rate by 150 basis point was unexpected which led to recession in the market.

“It was expected that the increase will be of 75 basis point, but it didn’t happen,” said Sheikh. 

He also said that the central bank has hinted at further hike in the interest rate which has further cautioned the traders. 

Sheikh, however, doesn’t expect market to shed any more points and said that it will rise by 10 percent to 15 percent in the first week of December. 

Yesterday, economic analyst Raza Jaffri echoed the same sentiments and blamed the interest rate hike for the bearish trend in the market. He hoped that market might recover in next two to three days. 

SBP announced the Monetary Policy Friday in which it raised the interest rate by 150 basis points to 8.75 percent. 

The policy rate increase was beyond what experts were expecting. They have predicted a maximum increase of 100 basis points. 

The impact of the interest rate hike was also seen Monday when the market lost over 600 points during trading

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pakistan stock exchange, psx, stock exchange, monetary policy, state bank of Pakistan

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