The Pakistan Stock Exchange (PSX) reached an all-time intraday high, exceeding 91,200 points, primarily driven by speculations of a significant reduction in the central bank’s policy rate during its upcoming monetary policy committee meeting in early November.
The KSE-100 index surged by 1,068 points, climbing to 91,264 points from the previous close of 90,195.51 points.
Samiullah Tariq, a senior analyst at Arif Habib Limited, attributed this rally to strong corporate results, improved dividends, declining yields, and expectations of further rate cuts by the central bank.
Market speculation surrounds a potential easing of the monetary policy on November 4, spurred by robust corporate earnings that are driving interest in sectors such as automotive, cement, banking, energy, and power generation.
In its last meeting, the State Bank of Pakistan (SBP) implemented its most significant rate cut since April 2020, lowering the key policy rate by 200 basis points to 17.5% due to decreasing inflation and falling global oil prices. The central bank had already cut rates by a cumulative 450 basis points since June 2024.
If further reductions occur, it would mark the fourth consecutive rate cut since the SBP started reversing interest rates in June 2024, indicating a significant improvement in the macroeconomic outlook and a shift in the SBP’s monetary policy approach.
Analysts speculate that a policy rate cut of up to 400 basis points could occur by December, reigniting foreign investor interest in Pakistan’s capital market.
Inflation fell to 6.9% year-on-year in September 2024, the lowest rate since January 2021, down from 9.6% in August, driven by a high base effect and easing commodity and energy prices, alongside a stable currency, according to the Pakistan Bureau of Statistics (PBS).