The Pakistan Stock Exchange (PSX) experienced a notable rise on Wednesday, with the benchmark KSE-100 Index surging nearly 700 points, or 0.89%, amid speculations of an imminent reduction in the policy rate. This upward momentum reflects growing investor confidence and positive market sentiment driven by anticipated monetary policy adjustments.
At 1:45 pm, the KSE-100 Index was trading at 79,686.15 points, marking a significant increase of 699.06 points from the previous close. The surge was primarily fueled by strong buying activity across several sectors, with the banking sector leading the charge. Major contributors to the index’s performance included prominent stocks such as Oil & Gas Development Company (OGDC), Pakistan Petroleum Limited (PPL), Pakistan State Oil (PSO), Shell Pakistan (SHEL), Habib Bank Limited (HBL), MCB Bank, and National Bank of Pakistan (NBP), all of which showed gains.
Other sectors, including fertilizers, pharmaceuticals, and oil and gas exploration companies, also contributed to the market’s positive trend. The collective buying across these sectors underscored the market’s bullish outlook, driven largely by expectations of favorable monetary policy changes.
The optimism in the market is largely attributed to speculations surrounding the State Bank of Pakistan’s (SBP) upcoming Monetary Policy Committee (MPC) meeting. Investors are hopeful that the central bank will announce a cut in the policy rate, which could further boost economic activity and market performance.
A recent survey conducted by JS Global, a leading brokerage house, revealed strong expectations for a substantial reduction in the policy rate. The survey indicated that while the majority of market participants anticipate a 100 basis points (bps) cut, a significant portion of respondents are expecting a more aggressive 150 bps reduction. Such a move could have a substantial impact on the market, potentially lowering borrowing costs and stimulating economic growth.
The SBP has released its advance calendar for MPC meetings covering the period from July to December 2024, following some delay. The first MPC meeting of this period is scheduled for July 29, which is expected to be a pivotal event for the market. The outcomes of this meeting will be closely watched by investors, as any decision on the policy rate could significantly influence market trends and investor sentiment.
The positive trend observed on Wednesday follows a similar uptick on Tuesday, when the KSE-100 Index closed nearly 450 points higher at 78,987.09. This continued upward movement reflects a rebound in market confidence, driven by the anticipation of favorable monetary policy adjustments.
In contrast, global markets showed a mixed performance on Wednesday. Asian stocks were generally subdued, influenced by disappointing earnings reports from major U.S. technology companies such as Tesla and Alphabet. These results impacted global investor sentiment, contributing to a slight decline in the MSCI’s broadest index of Asia-Pacific shares outside Japan, which fell 0.08% to 566.26. This level remains close to the one-month low of 562.43 observed earlier in the week.
Japan’s Nikkei index also experienced a modest decline of 0.23%. Additionally, Taiwan’s financial markets were closed due to a typhoon, further contributing to the subdued global market atmosphere.
