Stocks soared to a new record high, with the KSE-100 index closing at 84,910 points, an increase of 1,378.34 points, driven by a robust energy sector rally and growing optimism for potential interest rate cuts.
On Monday, the Pakistan Stock Exchange (PSX) witnessed the index surpass the previous record of 84,900 points. Investors are increasingly confident about the prospects of rate cuts by the State Bank of Pakistan (SBP), as evidenced by the day’s trading, in which 73 stocks advanced and only 23 declined.
Leading the gains, Oil and Gas Development Company (OGDC) surged by 7.66%, Pakistan Petroleum (PPL) by 6.82%, and Fauji Fertilizer Company (FFC) by 2.53%. PPL disclosed that its subsidiary, PPL Asia, secured a $6 million settlement with Iraq’s Midland Oil Company, boosting its per-share value by Rs0.61.
OGDC and PPL have benefited from timely gas price revisions, enhancing their liquidity and setting expectations for higher future payouts at Rs20/share and Rs15/share, respectively. These companies are also investing in capital-intensive projects like offshore drilling.
Analysts suggest the KSE-100 index has near-term support at 84,000 points, with potential for higher values.
A significant factor in the market’s performance is the decrease in Consumer Price Index-based inflation to 6.9% in September, a drop from previous figures and the lowest since January 2021. This decline has fueled expectations of a substantial rate cut by December.
Key sectors contributing to the market’s strength include automobile assemblers, cement, commercial banks, fertilizers, oil and gas exploration companies, and oil marketing companies (OMCs).
Prominent performers like Meezan Bank (MEBL), Fauji Fertilizer Bin Qasim (FFBL), National Bank of Pakistan (NBP), Pakistan State Oil (PSO), and Sui Northern Gas Pipelines (SNGP) all ended positively.
The benchmark index’s recent behaviour, establishing higher highs and lows, suggests further potential for growth. Investors speculate about an imminent rate cut by the SBP, possibly before its next scheduled meeting, as inflation continues its downward trajectory.
Last month, the SBP’s Monetary Policy Committee cut the key policy rate by 200 basis points to 17.5%, recognizing the significant decrease in headline and core inflation over recent months.
Investors also drew confidence from SBP Governor Jameel Ahmed’s announcement that Pakistan’s foreign exchange reserves had reached a level sufficient to cover two months of imports, bolstered by the first tranche from the IMF’s $7 billion Extended Fund Facility (EFF).
