Stocks on Monday breached the 84,900-points resistance level, hitting yet another record high, mainly fuelled by energy sector as investors held on to the hopes that central bank was yet again primed for another rate cut in its next monetary policy meeting, traders said.
Pakistan Stock Exchange’s (PSX) benchmark the KSE-100 Index surged to an intraday high of 84,910.29 points, up 1,378.34 points, or 1.65%, by 03:58pm.
Analysts, including Samiullah Tariq, pointed to rising expectations of a rate cut as the primary driver, citing a continuous drop in the consumer price index (CPI) inflation to single digits touching 6.9% in September.
Key sectors fueling the gains included automobile assemblers, cement, commercial banks, fertilisers, oil and gas exploration companies, and oil marketing companies (OMCs).
Ahsan Mehanti, analyst at Arif Habib Corp said stocks were hovering around all-times highs led by blue chip oil scrips amid speculations in earnings season.
“Surging global crude oil prices, slump in banking lending rates and Govt deliberation on privatisation of SOEs played a catalyst role in bullish activity in PSX,” Mehanti added.
Heavyweights such as National Bank of Pakistan (NBP), Meezan Bank (MEBL), Fauji Fertilizer Bin Qasim (FFBL), Pakistan Petroleum (PPL), Oil and Gas Development Company (OGDC), Sui Northern Gas Pipelines (SNGP), and Pakistan State Oil (PSO) were all in the green.
On Friday, the benchmark index jumped by 810.19 points or 0.98% to 83,531.96 points, hitting an intraday high of 83,605.73 points and a low of 82,594.80 points.
Analysts note that investors have upped their bets on the scope of the State Bank of Pakistan (SBP) extending its ongoing hawkish monetary policy as inflation has been retreating steadily over the past months.
Moreover, there are expectations of a policy rate cut of up to 400 basis points by December, as the room for easing exists.
The market is abuzz with speculations that the SBP could revise the interest rates downward even before its next scheduled meeting.
They added that the much-anticipated beginning of central bank’s long-awaited rate-cutting cycle, has also rekindled foreign interest in the country’s capital market.
Consumer Price Index (CPI)-based inflation dropped to 6.9% year-on-year in September 2024, the lowest since January 2021, down from 9.6% in August, driven by the high base effect, easing commodity and energy markets, and a stable currency, according to the data released by Pakistan Bureau of Statistics (PBS).
Last month, the State Bank of Pakistan’s (SBP) Monetary Policy Committee slashed the key policy rate by 200bps to 17.5% from 19.5%, citing a steep fall in both headline and core inflation over the past two months.
Investors also gained confidence from SBP Governor Jameel Ahmed’s statement that Pakistan’s foreign exchange reserves had risen to cover two months of imports, following the receipt of the first tranche from the IMF’s $7 billion Extended Fund Facility (EFF).
