Improved macroeconomic indicators at the local front and the Federal Reserve’s larger-than-usual reduction in the policy rate drove investor optimism at the Pakistan Stock Exchange (PSX) as the benchmark KSE-100 Index gained nearly 1,500 points during trading on Thursday.
At 12:10pm, the benchmark index was hovering at 81,920.11, an increase of 1,458.78 points of 1.81%.
During trading, the benchmark index also hit a intra-day record high, touching the 82,000 level for a brief period.
Buying was witnessed in key sectors including commercial banks, cement, oil and gas exploration companies and OMCs. Index-heavy stocks including SSGC, OGDC, PPL, POL, HBL, MCB and MEBL traded in the green.
Market experts attributed the bullish trend to a number of factors.
“The Federal Reserve rate cut is definitely one of the reasons driving the market,” Sana Tawfik, Head of Research at Arif Habib Limited (AHL), told Business Recorder.
The US Federal Reserve cut interest rates by half of a percentage point on Wednesday, kicking off what is expected to be a steady easing of monetary policy with a larger-than-usual reduction in borrowing costs that followed growing unease about the health of the job market.
“The committee has gained greater confidence that inflation is moving sustainably toward 2%, and judges that the risks to achieving its employment and inflation goals are roughly in balance,” policymakers on the US central bank’s rate-setting committee said in their latest statement.
On the other hand, improvement in local macroeconomic indicators including a current account surplus and expectation of further decline in inflation is also fueling the positive sentiment, said Tawfik.
Pakistan’s current account posted a surplus of $75 million in August 2024 compared to a deficit of $152 million in the same month of the previous fiscal year, data released by the State Bank of Pakistan (SBP) on Wednesday showed.
“The market was already optimistic especially due to developments on the International Monetary Fund (IMF) front, and is expected to remain so in the coming days as the IMF Executive Board meets to approve funding for Pakistan,” she added.
The IMF board is scheduled to take Pakistan’s 37-month Extended Fund Facility (EFF) of about $7 billion on the agenda on September 25.
On Wednesday, the benchmark KSE-100 Index settled at 80,461.34, up by 970.20 points or 1.22%.
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