Karachi, Pakistan – Pakistan’s equity market experienced a downturn on Tuesday as investors opted to secure profits ahead of the State Bank of Pakistan’s (SBP) crucial monetary policy announcement, scheduled for Wednesday, July 30.
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index closed at 137,964.81 points, marking a decline of 1,415.24 points, or 1.02%, from its previous close of 139,380.05. During the trading session, the index initially climbed to an intraday high of 140,331.01 points, gaining 0.68%, but then slid to a low of 137,636.37 points, reflecting a drop of 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,” stated Ahfaz Mustafa, CEO of Ismail Iqbal Securities. He added, “The uncertainty will end after tomorrow’s policy [announcement] and the statement of the SBP which will set the tone for future policy action.”
The Monetary Policy Committee (MPC) is set to meet on July 30 to determine the benchmark interest rate. Analysts are divided on whether the SBP will implement a fresh rate cut, considering the backdrop of falling inflation and a stable exchange rate.
Economic Outlook and US-Pakistan Trade Talks
Meanwhile, Pakistan and the United States continued discussions on tariff concessions on Monday. This 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 reported that both sides reviewed key bilateral issues, including tariffs and regional developments.
Finance Minister Muhammad Aurangzeb has departed for the US to finalize the agreement, which Pakistan hopes to conclude within days. The tariffs, originally slated to take effect this month, have been deferred until August to allow room for ongoing negotiations. The US remains Pakistan’s largest export destination, accounting for approximately $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%. This anticipated decrease is attributed to stable energy prices, gains in the exchange rate, and robust supply chains. The report also estimated full-year inflation at 4.49%—a nine-year low—significantly down from 23.4% in the previous year.
Pakistan’s GDP growth is projected at 4.2%, supported by a strong agricultural rebound and consistent improvements in manufacturing and external accounts. The report noted that large-scale manufacturing (LSM) increased by 0.2% year-on-year over the first eleven months of FY2024, while exports rose by 11.7% in June to $2.75 billion. Imports, however, surged by 25.8% to $5.2 billion during the same period.
Notably, Pakistan achieved a current account surplus of $491 million in June and an annual surplus of $2.1 billion in FY25—marking its first surplus in 14 years and the largest in over two decades. The agriculture sector continues to demonstrate strong performance due to improved water availability, increased fertilizer usage, and enhanced agri-credit disbursement.
On Monday, the benchmark KSE-100 Index had seen an increase of 172.77 points, or 0.12%, closing at 139,380.06 points.
