The Pakistan Stock Exchange (PSX) reached a record intraday high of over 91,200 points, primarily fueled by speculation regarding a significant downward adjustment in the policy rate during the central bank’s monetary policy committee meeting scheduled for the first week of November.
The benchmark KSE-100 index surged by 1,068 points, reaching 91,264 points, compared to the previous closing of 90,195.51 points.
Samiullah Tariq, a senior analyst at Arif Habib Limited, commented on the ongoing rally, attributing it to strong corporate earnings, increased dividends, declining yields, and the anticipation of further cuts in the policy rate during the central bank’s upcoming meeting.
Market speculation centers around a potential substantial easing of the monetary policy on November 4, while robust corporate profits are driving buying interest across various sectors, including automotive, cement, banking, energy, and power generation.
In the previous meeting, the State Bank of Pakistan’s Monetary Policy Committee (MPC) implemented its largest rate cut since April 2020, lowering the key policy rate by 200 basis points to 17.5%, citing moderating inflation and decreasing international oil prices. Since June 2024, the central bank has reduced the policy rate by a cumulative 450 basis points, including cuts of 350 basis points in July and September.
Should the rate be lowered again, it would mark the fourth consecutive cut since the SBP began reversing interest rates in June 2024, signaling a notable improvement in the country’s macroeconomic outlook and a shift in the central bank’s monetary policy stance.
Market speculation suggests a potential policy rate cut of up to 400 basis points by December, as analysts believe there is room for further easing, which has reignited foreign investors’ interest in the capital market.
Inflation fell to 6.9% year-on-year in September 2024, the lowest level since January 2021, down from 9.6% in August. This decrease is attributed to a high base effect, easing commodity and energy prices, and a stable currency, according to the Pakistan Bureau of Statistics (PBS).
