Yet another record high at PSX on rate cut hopes
Bulls retained their control over the trade floor as shares at Pakistan Stock Exchange (PSX) surged more than 800 points in intraday trade on Monday.
The benchmark KSE-100 index climbed 855.89 points, or 0.95 per cent, to stand at 90,849.85 points from the previous close of 89,993.96 points at 10:42am. At 12:13pm, the index crossed the 91,000 milestone.
Mohammed Sohail, chief executive of Topline Securities, noted that “Non-stop bull run” continued at the stock exchange amid “better than expected corporate profits and hope of big rate cuts” in the upcoming Monetary Policy Committee (MPC) meetings in November and December.
Awais Ashraf, director research at AKD Securities, said, “Optimism surrounding potential interest rate cuts and strong corporate earnings is currently boosting investor sentiment.”
Sana Tawfik, head of research at Arif Habib Limited, echoed the same sentiments. She said that the bullish momentum continued due to ancitipation of a big interest rate cut, strong corporate result season and improved liquidity.
On Friday, the stock market had rallied on the back of investors anticipating a major interest rate cut in the upcoming Monetary Policy Committee (MPC) meeting on November 4.
Most analysts believe that the State Bank of Pakistan (SBP) will reduce its policy rate by 200 basis points in its upcoming meeting on November 4, marking the fourth consecutive cut since June, thanks to a decline in inflation, a low current account deficit and higher remittances.
Last week, in a survey conducted by Topline Securities, the brokerage firm noted that 85pc of market participants expected that the central bank would announce a minimum rate cut of 200 basis points.
“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,” the firm said, adding that that the inflation trajectory was expected to continue in October within a range of 6.5pc to 7.0pc.
More to follow