The stock reached a new high on Monday, crossing the 116,000-point mark early, driven by expectations of an SBP rate cut.
Strong macroeconomic signs like solid remittance inflows, stable reserves, and falling inflation have boosted economic recovery confidence.
The PSX benchmark KSE-100 Shares Index climbed 1,867.61 points or 1.63%, closing at 116,169.41 after peaking at 116,681.59.
“Stocks are bullish across the board as investors expect a major SBP rate cut amid low inflation,” said Ahsan Mehanti, Managing Director of Arif Habib Commodities.
He highlighted recent government bond yield cuts to 11.99% and positive economic indicators as catalysts for the PSX’s surge, which are as follows:
- The market is upbeat, anticipating a rate cut from today’s MPC announcement, expected between 200 and 500 basis points.
- November’s inflation dropped to 4.9%, creating a positive real interest rate of 10% and room for monetary easing.
- A recent 250 basis point cut in National Savings Schemes (NSS) profit rates should shift funds from savings to equities.
- Remittances grew 29% year-on-year to $2.9 billion in November, stabilizing foreign reserves at $16.6 billion as of December 6, 2024.
- The Current Account Deficit (CAD) narrowed by 79% year-on-year to $217 million in the first two months of FY2025.
- Projected exports of $33 billion and remittances of $33.5 billion by FY2025’s end are buoyed by government incentives.
- Auto sales, indicating strong consumer demand, surged 52% year-on-year in November.
- The banking sector’s advance-to-deposit ratio (ADR) increased to 47.8% in November, nearing the mandatory 50% threshold.
- T-bills yield fell, with three-month rates dropping 100 basis points to 11.99%.
The PSX’s recent performance, breaking the 114,000-point barrier, reflects easing political tensions and solid economic foundations.
Today’s SBP policy rate announcement is anticipated to maintain the market’s bullish momentum.
