Investors’ Confidence Surges as KSE-100 Index Reaches Historic 107,109 Points
The Pakistan Stock Exchange (PSX) marked a significant milestone on Thursday, as the benchmark KSE-100 Index climbed to a new intra-day high of 107,109.28 points, gaining 2,004.95 points (1.91%). The rally reflects growing optimism around a potential major interest rate cut in the State Bank of Pakistan’s (SBP) upcoming monetary policy meeting on December 16.
This bullish momentum, driven by record-low inflation and improved economic indicators, underscores sustained investor confidence in the capital market.
Factors Powering the Market’s Upward Trajectory
“Strong liquidity, stable macro indicators, expectations of a rate cut, and reduced political risks are propelling the market,” said Muhammad Saad Ali, Director of Research at Intermarket Securities Ltd. He also cited stock-specific news as a contributing factor to the positive sentiment.
Finance Minister Mohammad Aurangzeb reiterated the government’s commitment to economic stabilization through structural reforms aligned with the International Monetary Fund (IMF) programme. He emphasized that a narrowing current account deficit, declining inflation, and signs of economic recovery are reshaping Pakistan’s financial landscape.
Inflation Decline Paves the Way for Monetary Easing
With inflation hitting 4.9% in November, its lowest level in 78 months, expectations for further monetary easing are rising. This figure is well below the SBP’s target range of 5-7%, leaving room for an anticipated rate cut.
The SBP has already slashed rates by 700 basis points across four consecutive meetings, bringing the policy rate to 15%. Experts predict an additional 200 basis points (bps) cut, with 63% of analysts surveyed by Topline Securities forecasting exactly that.
According to Topline Securities, “November’s inflation reading creates significant space for rate reductions, fueled by faster food disinflation and negative electricity price adjustments.”
Trade Data Bolsters Market Optimism
The Pakistan Bureau of Statistics (PBS) reported a 7.39% narrowing of the trade deficit to $8.651 billion during the July-November period of FY24. Notably, exports rose by 12.57%, while imports increased marginally by 3.90%, further supporting the case for economic stability.
The November trade deficit also fell 18.60% year-on-year, reflecting stronger economic fundamentals that continue to inspire confidence among investors.
Outlook: Brighter Days Ahead for PSX
With inflation under control, a narrowing trade deficit, and the likelihood of further monetary easing, the PSX is poised for sustained growth. Thursday’s rally builds on Wednesday’s gains, where the KSE-100 Index closed at 105,104.33 points after rising 545.26 points earlier in the session.
The current upward trajectory signals a brighter outlook for Pakistan’s economy, with investors anticipating continued market performance and potential economic reforms.
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PSX Crosses 104,000 as Inflation Eases and Rate Cut Hopes Soar
