The Pakistan Stock Exchange heads into a new week after a difficult one. The benchmark KSE-100 index fell 4,044 points during the week ended Friday, 23 October, closing at 162,374. That is a drop of about 2.43 percent from the previous week’s close of 166,419.
A week under pressure
Friday itself was the worst day of the week. The KSE-100 fell 1,549 points on the day to close at 162,374. During the week the index moved between a high of 166,698 and a low of 162,292, showing how nervous trading had become.
Trading activity stayed heavy. Around 1.96 billion shares changed hands during the week, worth about Rs96 billion. The total value of all listed companies, known as market capitalisation, fell by Rs465 billion to Rs18,014 billion.
Two worries weighed on investors all week. First, tensions in the Middle East kept rising, and with them the price of oil in world markets. Pakistan imports most of its oil, so dearer crude raises fears of higher inflation and a bigger import bill. Second, investors were cautious ahead of the State Bank’s interest rate decision, due on Monday.
What to watch this week
The main event is Monday, 26 October, when the State Bank of Pakistan’s Monetary Policy Committee meets. The policy rate — the benchmark interest rate set by the central bank — is currently 11.5 percent. A market survey found 61 percent of participants expect a rise, most of them by half a percentage point to 12 percent. A Bloomberg report carried the same expectation.
Why might rates rise? Inflation has stayed above the State Bank’s target range of 5 to 7 percent, reaching double digits in five of the past six months. Headline inflation was 11.1 percent in August, easing to about 10.26 percent in September, while core inflation — which leaves out volatile food and energy prices — stood at 8.7 percent. Higher energy costs are adding to the pressure.
Not everyone agrees. Some analysts argue the case for holding rates steady, pointing to strong remittances from overseas Pakistanis, improving exports, record foreign exchange reserves and a contained current account. Business groups, meanwhile, warn that higher rates raise borrowing costs for companies already facing dearer energy.
What this means
For ordinary investors, Monday’s decision is likely to set the market’s direction for the week. A rate rise would confirm the central bank is prioritising inflation control, which can weigh on share prices in the short term but supports the rupee. A decision to hold would surprise many traders and could lift sentiment. Either way, oil prices and news from the Middle East will remain the second big driver. This is a week to watch events, not to rush decisions.
Sources: Dunya News, Business Recorder, Bloomberg via Mettis Global. Written in our own words for information only — not investment advice.