Stocks on Monday surpassed a record high of 84,900, driven by a massive rally in the energy sector and growing optimism about potential interest rate cuts, traders said.
The benchmark KSE-100 stock index of the Pakistan Stock Exchange (PSX) rose to an intraday high of 84,910.29 points, up 1,378.34 points, or 1.65%.
Samiullah Tariq, Head of Research and Development at Pakistan-Kuwait Investment Company (Private) Limited, cited rising expectations of interest rate cuts as the main driver, pointing to the continued decline in consumer price index (CPI)-based inflation to single digits to 6.9. % in September.
Key sectors that consolidated gains included automobile assemblers, cement, commercial banks, fertilizers, oil and gas exploration companies and marketing companies.
Ehsan Mehanti, an analyst at Arif Habib, said stocks are hovering around all-time highs led by blue-chip oil bonds amid earnings season speculation.
“Rising global crude oil prices, decline in bank lending rates, and government deliberations on privatization of state-owned enterprises played a catalytic role in the bullish activity of PSX stock,” Mohanty added.
Heavyweights like National Bank of Pakistan (NBP), Meezan Bank (MEBL), Fauji Fertilizers Bin Qasim (FFBL), Pakistan Petroleum Corporation (PPL), Oil and Gas Development Corporation (OGDC), Sui Northern Gas Pipelines (SNGP), Pakistan . State Oil (PSO) was all in the green.
On Friday, the main index jumped 810.19 points, or 0.98%, to 83,531.96 points, recording the highest level during the day at 83,605.73 points and the lowest level at 82,594.80 points.
According to JS Research, the indicator has created a higher high and a higher low, indicating more upside potential.
Analysts point out that investors have raised their bets on the scope of the State Bank of Pakistan (SBP) expanding its ongoing tight monetary policy as inflation has been steadily declining over the past months.
Moreover, there are expectations of a rate cut of up to 400 basis points by December, as there is scope for easing.
The market is abuzz with speculation that the Federal Reserve may adjust interest rates downward even before its next scheduled meeting.
The long-awaited start of the central bank’s interest rate cutting cycle has also revived foreign interest in the country’s capital market, they added.
CPI-based inflation fell to 6.9% y/y in September 2024, the lowest since January 2021, down from 9.6% in August, driven by a higher base effect, facilitating commodity and energy markets, and a stable currency, according to the Pakistan Bureau of Statistics ( PBS).
Last month, the State Bank of England’s Monetary Policy Committee cut its key interest rate by 200 basis points to 17.5% from 19.5%, citing a sharp decline in both headline and core inflation over the past two months.
Investors also gained confidence from State Bank of Pakistan Governor Jamil Ahmed’s statement that Pakistan’s foreign exchange reserves had risen to cover two months of imports, after receiving the first tranche of the IMF’s $7 billion Extended Fund Facility.
