After the software failure woes of Jul-Oct, now comes another bleeding session to PSX. This time a gaping wound of an interest rate hike. While a rate hike was well expected due to overheating economy, the jumping increase of 150 bps has jolted the investors out of their seats. At times it feels the steering wheel of policymaking is broken causing the economic vehicle to steer erratically from side to side. Overall the decision of such a steep hike feels like a disaster as it will negatively impact a wide spectrum of economic activities and may not yield any sizeable benefits to cut down inflation. On the global front, another rapidly spreading variant of COVID-19 named "Omicron" has sent the government into panic lockdown and dashed the hopes of economic recovery and early policy rate hikes.
Looking forward to PSX, a double bottom has been observed at 43800 +/- 300, bourse remains unstable in the light of ever-changing economic tides, economic disturbances, uncertainty, and political instability. In the light of global events and economic distress prevalent in the country, we can only hope that the policy rate hike may be a temporary decision - albeit a short-sighted one. Although the economic history of the country tells us that rates once gone up rarely come down again. Another concerning event is the rejection by IMF on the $6 billion bailout program. Although not directly related to the PSX, such events do create pressure on the USD/PKR currency relationship.
Looking forward, we market turbulence to exist in foreseeable future keeping it unpredictable and nerve-wracking.