As shares at the Pakistan Stock Exchange (PSX) rose 500 points on Monday ahead of the central bank’s Monetary Policy Committee (MPC) meeting on January 27, bulls continued to dominate the trading floor.
From its previous close of 115,272.08 at 2:29 pm, the benchmark KSE-100 index increased 817.68 points, or 0.71 percent, to stand at 116,089.76 points.
The index ended the day at 115,844.81, up 572.73, or 0.5 percent, from the previous finish.
The upward trajectory was ascribed by Mohammed Sohail, CEO of Topline Securities, to “signs of political stability, along with expectations of another rate cut, helping sentiments.”
“The resolution of political uncertainty following the verdict in a graft case has boosted investor confidence,” stated Awais Ashraf, director of research at AKD Securities.
“At the next Monetary Policy Committee (MPC) meeting, investors are anticipating a possible cut in the policy rate and are hopeful about an improving economic outlook,” he continued.
According to Ashraf, a record number of accounts had been opened at the PSX in the last three months, underscoring “the growing propensity to save amid government drive of documentation and the growing trust of individual Pakistanis in the improving economic conditions.”
“Record individual purchasing activity, totaling $22.1 million this month, reflects this sentiment,” he said.
To determine the key interest rate, the MPC of the State Bank of Pakistan (SBP) is scheduled to convene on January 27.
According to a study of market participants by Karachi-based brokerage Topline Securities, 61% of respondents anticipated a 100 basis point (bps) rate drop.
Of the remaining participants, 6 percent predicted no change in monetary policy, 7 percent expected a rate drop of 150 bps, and 17 percent expected a rate cut of 200 bps.
“Despite a 900bps reduction in total interest rates in the last five consecutive meetings since June 2024, we believe that participants are anticipating a rate cut because of the high real rates of 950bps in January 2025 compared to [the] historic average of 200-300bps,” the brokerage firm stated.
Additionally, it emphasized that real rates are high because the January 2025 monthly inflation figure was predicted to be approximately 3.5 percent due to faster food disinflation and negative energy price adjustments (FCA).