Low interest rates are need of crucial for economic growth as they encourage borrowing and spending. It is directly linked with stimulating investment by making borrowing cheaper, leading to increased business activity.
The closely watched move by State Bank of Pakistan to cut policy rate is expected to have positive impact on the earnings of several listed companies.
A report shared by Arif Habib Limited suggests that a rate cut will benefit five key sectors.
Auto Sector
In the auto sector, auto sectors are expected to see an EPS growth of 3.7 percent and 3.2 percent respectively.
Cement Sector
Cement sector is expected to benefit significantly, with key players are likely to see increases in their earnings per share. Lower financing costs resulting from the rate cut are expected to boost profitability and support sectoral expansion. 
Textile
In the textile sector, Nishat (Chunian) Limited and Nishat Mills Limited are projected to witness EPS growth of 12.0pc and 3.7pc respectively.
Chemical
Chemical sector is expected to benefit as well, with Lotte Chemical Pakistan Limited and Engro Polymer & Chemicals Limited likely to see an EPS increase of 1.8pc and 1.6pc respectively.
On the other hand, commercial banks and production sectors are expected to face challenges. Several commercial banks will experience declines.
The reduced interest rate is expected to impact net interest income for bank stocks, while reduced returns on investments and currency volatility may affect E&P stocks. Fertilizer stocks are also expected to face woes.
