Shares of the Pakistan Stock Exchange (PSX) broke beyond the 88,000 mark on Thursday, as bulls resumed their rampage on the trading floor.
From its previous close of 87,194.53 points to 10:56am, the benchmark KSR-100 index first increased 851.11 points, or 0.98 percent, to stand at 88,045.64 points. It increased further by 1:17 p.m., adding 1,189.31 points, or 1.36 percent, overall. Ultimately, it concluded at 88,945.98 points, up 2.01 points, or 1751.45 points, from the closing before.
The bull run, according to Mohammed Sohail, CEO of Topline Securities, was caused by locals purchasing aggressively on declining bond yields in anticipation of a significant monetary policy rate decrease in November.
Due to a decrease in inflation, a low current account deficit, and increased remittances, the majority of analysts predict that the State Bank of Pakistan (SBP) would lower its policy rate by 200 basic points at its next meeting on November 4, the fourth straight cut since June.
“With the expectation of significant rate cuts in the monetary policy meetings in November and December, the Pakistani market saw another high driven by aggressive institutional buying”, he said.
He pointed out that over the past two days, “volumes for the ready and futures counters combined” have exceeded Rs40 billion.
“We anticipated that fund conversions will continue to flow towards equities,” he continued.
“Investor sentiment has turned bullish on equities with the approval of a $3 billion loan facility from the
Islamic Trade Financing Corporation [ITFC] and the easing of political risks,” said Awais Ashraf, director of
research at AKD Securities.
The finance ministry acknowledged in a post on X that Finance Minister Muhammad Aurangzeb met with the ITFC group in Washington and thanked them for their assistance of $3 billion in commodities financing over the following three years.
Despite a total of 4.5pc key policy rate decreases since June of this year, Ashraf noted that markets also expected “further aggressive monetary easing in the upcoming policy announcement” because real interest rates were still above 10pc.
“It is anticipated that stocks that stand to gain from monetary easing and continuous structural reforms will perform better than others”, he continued.
As of right now, the average traded volume of the stock market has grown by 73.36 percent annually.
Expectations of a rate drop in the monetary policy announcement scheduled for November 4 had caused markets to rise yesterday.
