The stock market on Thursday extended its climb to cross the 106,000-point mark on the back of a substantial interest rate cut, record low inflation and strong economic indicators ahead of the State Bank of Pakistan (SBP)’s (SBP) monetary policy meeting on December 16. Continued.
The benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) rose 1,018.72 points or 0.97 percent to hit a new intraday high of 106,123.05, reflecting continued investor confidence and optimism in the market’s upward direction. is
Finance Minister Muhammad Aurangzeb has also reiterated the government’s commitment to economic stability through structural reforms and an end to the International Monetary Fund (IMF) programme.
Addressing a function in Islamabad, Aurangzeb highlighted that the current account deficit has narrowed, inflation has come down to a 70-month low and the country’s economy is showing signs of recovery.
The Ministry of Finance also reported an improvement in financial stability, attributed to ongoing reforms.
As inflation continues to decline, expectations for further monetary easing are rising, signaling a brighter economic outlook.
The SBP has already cut interest rates by 700 basis points (bps) in four consecutive meetings since June, bringing the rate to 15 percent. Experts widely expect another significant decline, with most analysts predicting a decline of at least 200 bps.
A survey conducted by Topline Securities showed that 71% of respondents expected a minimum cut of 200 bps, 63% predicted exactly 200 bps, 30% expected 250 bps. , and 7% expect a big cut.
The case for monetary easing is supported by November’s consumer price index (CPI) inflation, which came in at 4.9 percent, the lowest in 78 months and within the SBP’s target range of 5-7 percent. There is very little.
“This reading keeps inflation well below target, leaving ample room for further rate cuts,” noted Topline Securities.
The decline in inflation is due to food disinflation and adverse adjustment in electricity prices. Analysts have predicted that inflation will remain in the single digits in the coming months, maintaining a favorable environment for monetary easing.
Trade data released by the Pakistan Bureau of Statistics (PBS) further bolstered market sentiment. Pakistan’s trade deficit during the first five months of the current fiscal year (July-November) decreased by 7.39 percent to $8.651 billion from $9.341 billion during the same period last year.
Exports increased by 12.57% to $13.69 billion while imports increased by 3.90% to $22.342 billion. November’s trade deficit narrowed further, narrowing by 18.60 percent year-on-year to $1.589 billion in November 2023, compared to $1.952 billion in November 2023.
Thursday’s rally follows an impressive session on Wednesday, when the KSE-100 shares index rose 545.26 points, or 0.52 percent, to close at 105,104.33 points after hitting an intraday high of 105,473.56 points.