On Monday, shares at the Pakistan Stock Exchange (PSX) surged by more than 800 points during intraday trade, preserving bulls’ dominance over the floor.
At 10:42 a.m., the benchmark KSE-100 index increased by 855.89 points, or 0.95%, to 90,849.85 points from its previous close of 89,993.96 points. The index reached the 91,000 mark at 12:13 p.m.
Topline Securities CEO Mohammed Sohail stated that the stock market was experiencing a “non-stop bull run” despite “better than expected corporate profits and hope of big rate cuts” at the upcoming Monetary Policy Committee (MPC) meetings in November and December.
“Optimism surrounding potential interest rate cuts and strong corporate earnings is currently boosting investor sentiment,” stated Awais Ashraf, director of research at AKD Securities.
The same sentiments were echoed by Sana Tawfik, head of research at Arif Habib Limited. She stated that improved liquidity, a significant interest rate cut, and the continuation of bullish momentum contributed to this.
Investors’ expectations of a significant reduction in interest rates at the Monetary Policy Committee (MPC) meeting on November 4 fueled a rally in the stock market on Friday.
Due to lower inflation, a smaller current account deficit, and increased remittances, the majority of analysts anticipate that the State Bank of Pakistan (SBP) will cut its policy rate by 200 basis points at its upcoming meeting on November 4. This would be the fourth cut in a row since June.
Topline Securities found in a survey it conducted this past week that 85 percent of market participants anticipated that the central bank would announce a minimum rate cut of 200 basis points.
According to the company, “we believe that the larger rate cut expectations in the upcoming monetary policy meetings are driven by the single-digit inflation reading of 6.9pc in Sept 2024.” Additionally, the trajectory of inflation was anticipated to continue in October within a range of 6.5pc to 7.0pc.
