Stocks extended their bullish rally at the Pakistan Stock Exchange (PSX) on Wednesday, with the benchmark KSE-100 Index gaining over 500 points during the intraday trading.
According to the PSX website, the benchmark index was hovering at the 92,846.84 level at 11:25 am, up by 542.52 points or 0.59% from the previous close.
A buying activity was observed in major sectors including automobile assemblers, automobile parts & accessories, cement, chemical, commercial banks, engineering, oil & gas marketing companies, pharmaceuticals, power generation & distribution, property, refinery, and technology & communication
On Tuesday, the KSE-100 closed at an all-time high of 92,304.32 points.
The market’s bullish momentum is driven by increased investor confidence, supported by improved economic indicators and the recent 250 basis points (bps) rate cut by the central bank.
On Monday, the SBP reduced the key policy rate by 250 bps from 17.5% to 15%. Many economists were expecting the SBP to cut the policy rate by 200 basis points. This is the fourth consecutive reduction since June 2024.
In its statement, the Monetary Policy Committee noted that inflation has declined faster than expected and has reached close to its medium-term target range in October (7.2%). The committee assessed that the tight monetary policy stance continues to play an important role in sustaining the downward trend in inflation.
Last week, the KSE-100 index gained 0.96% week-over-week (WoW). The positive rally was fueled by an anticipated continuation of monetary easing and the country reporting its first-ever quarterly budget surplus in over 20 years of Rs1.7 trillion during the first quarter of FY25, coupled with strong corporate results.
However, the government missed two of the IMF’s quarterly targets: one for tax collection, marking a shortfall of Rs 90 billion, and another for cash surplus for the provinces, marking a shortfall of Rs 182 billion.
The headline inflation for October clocked in at 7.2% YoY, with real interest rates comfortably above 10% at current policy rate levels.
On the macro front, the trade deficit for October clocked in at $1.4 billion, with exports for the month standing at $2.97 billion, up 4.9% MoM.
Investors around the world are also closely watching the US election for clues on who will become the next president of the world’s biggest economy.
Benchmark stock indexes across Asia were mostly higher on Wednesday, while the US dollar was also up.
In Japan, the benchmark Nikkei 225 stock index was up by 2%, while Australia’s ASX 200 was about 1% higher.
In mainland China, the Shanghai Composite Index was flat, while Hong Kong’s Hang Seng was down by around 2.5%.
Futures trading on the major US stock indexes were pointing sharply higher. That came after the Dow Jones Industrial Average, S&P 500, and Nasdaq all closed more than 1% higher.
