KARACHI: The Pakistan Stock Exchange (PSX) posted its third largest single-day gain on Thursday, adding 3,135 points or 2.98 percent to the index to close at 108,239, with analysts attributing the rally to positive macroeconomic indicators.
The previous close on Wednesday was 105,104.33 points after several days of rallying on the back of investor expectations of a significant interest rate cut by the central bank at the next monetary policy meeting on Dec. 16. Market analysts also credit the rally to improving macroeconomic indicators, strong trade performance, and the anticipation of further monetary easing.
The State Bank has already slashed interest rates by 700 basis points (bps) in four consecutive meetings since June, bringing the rate to 15 percent.
According to a poll conducted by Topline Securities, 71 percent of participants expect the central bank will announce a minimum rate cut of 200bps later this month.
“The benchmark KSE-100 index surged to an intraday high of 3,241 points, fueled by heightened investor confidence and robust market sentiment surrounding expectations of a substantial rate cut in the upcoming monetary policy meeting, scheduled for December 16, 2024,” Topline Securities said in a market review.
“The day concluded with the index at an impressive 108,239 level, marking a significant gain of 3,134 points or 2.98 percent.”
Record-breaking volumes underscored the day’s intense trading activity, reflecting broad-based participation across sectors. The rally was predominantly driven by relentless buying from local mutual funds, which acted as the primary catalyst for sustaining the bull run, Topline added:
“Trading activity was exceptionally vibrant, with a total volume of 1,645 million shares and a turnover of Rs63billion. The Bank of Punjab (BOP) led the volume charts, recording an extraordinary 163 million shares traded during the session.”
Pakistan’s annual consumer inflation slowed to 4.9 percent in November, lower than the government’s forecast and the lowest in nearly six years. This is down from 38 percent last year.
Trade data released by the Pakistan Bureau of Statistics also supports positive investor sentiment as the trade deficit narrowed by 7.39 percent during the first five months (July-November) of the current fiscal year, standing at $8.651 billion, compared to $9.341 billion during the same period last year.
Exports rose by 12.57 percent to hit $13.69 billion, while imports increased by 3.90 percent to $22.342 billion during this period. November’s trade deficit narrowed even further, dropping by 18.60 percent year-on-year to $1.589 billion compared to $1.952 billion in November 2023.
