Shares rally as SBP rate hike misses market expectations.

Shares at the Pakistan Stock Exchange (PSX) rose 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 612.06 points, or 1.59 per cent, to close at 39,055.65 points. It reached an intraday high of 648.11 points, or 1.69pc, around 3:25pm.

Intermarket Securities' Head of Equity Raza Jafri said the index reacted 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 rose.

Dalal Securities CEO Siddique Dalal said the market had expected the rate to be increased by 1.5pc instead of 1pc.

He noted the oil sector drove the market upwards. Dalal also termed the central bank's decision to offer one-time facilitation to importers whose consignments were stuck at the ports a 'positive development'.

He cautioned, however, that it was yet to be seen whether the market would sustain the uptrend.

First National Equities Limited Director Amir Shehzad also said the rate hike was lower than expected.

The oil sector was behind today's rally...