ISLAMABAD: The Pakistan Stock Exchange (PSX) crossed 110,000 points during intraday trade on Monday to settle at 109,970.38 points at closing, amid strong liquidity available in the market and on the hopes of an interest rate cut next week, analysts said.
The benchmark KSE-100 index closed at 916.43 points up, or 0.84%, to stand at 109,970.38 points from the previous close of 109,053.95. The stock exchange had gained more than 1,000 points to reach 110,264 points at noon on Monday. This was the 9th consecutive session when shares at the market traded in green.
Analysts credit the rally to strong liquidity available with mutual funds as investors convert from fixed-income instruments to equities amid a reduction in interest rates.
“The longevity of the rally will likely depend on delivery of structural reforms such as efforts to broaden the tax net, energy reforms, state-owned enterprises,” Raza Jafri, chief executive officer of the Karachi-based EFG Hermes brokerage house, told Arab News.
“So far the government appears committed to delivering reforms which is positive, but eventually the talk will have to translate into action.”
Pakistan slashed interest rates by 250 basis points in November to help revive a sluggish economy, amid a major drop in the annual inflation rate. The State Bank has already slashed interest rates by 700 basis points (bps) in four consecutive meetings since June, bringing the rate to 15%.
According to a poll conducted by Topline Securities, 71% of participants expect the central bank will announce a minimum rate cut of 200bps at the upcoming Monetary Policy Committee meeting on Dec. 16.
Ahsan Mehanti, CEO of Arif Habib Corporation, attributed the bullish trend at the PSX to falling lending rates and speculation about another major policy rate cut by the central bank this week.
“Rupee’s stability on surging foreign exchange reserves and upbeat economic indicators played a catalyst role in the record surge at market,” he added.
Annual consumer inflation also slowed to 4.9% in Pakistan in November, lower than the government’s forecast, largely due to a high base a year earlier. It cooled from 7.2% in October, a sharp drop from a multi-decade high of nearly 40% in May 2023.
