Historic high: KSE-100 settles above 116,000 as investors anticipate further policy rate cut

The Pakistan Stock Exchange (PSX) registered significant gains on Monday as the benchmark KSE-100 Index settled above the 116,000 level for the first time in history with a gain of nearly 1,900 points or 1.7%.

A bullish momentum was observed throughout the trading session with the benchmark KSE-100 Index hitting an intra-day high of 116,681.59.

At close, the benchmark index settled at 116,169.41, an increase of 1,867.61 points or 1.63%.

Buying was witnessed in key sectors including automobile assemblers, oil and gas exploration companies, OMCs and refinery, while some selling pressure was observed in commercial banks, fertilizer and the power generation sector.

Index-heavy energy sector stocks including MARI, OGDC, POL, PPL, PSO, SNGPL and SSGC and NRL traded in the green, whereas the banking sector’s HBL, MCB, MEBL and ENGRO traded in the red.

Meanwhile, the overall buying momentum came from anticipation of a further cut in the policy rate in the upcoming Monetary Policy Committee (MPC) meeting scheduled for later in the day (Monday).

With the CPI remaining below the 5% threshold and T-bill yields in the recent auction dropping to 12% for the 3 months and 6 months paper, down 100bps and 89bps respectively, investor optimism has been bolstered, fuelling market experts’ expectations for continued monetary easing that began in June 2024.

During the previous week, the PSX continued its record-breaking trend and hit new historic levels with impressive gains on the back of strong interest of local investors coupled with institutional support.

The benchmark KSE-100 index surged by 5,247.85 points on a week-on-week basis and closed at a new highest-ever level of 114,301.80 points.

Internationally, Asian stock markets were in a wary mood on Monday as surging bond yields challenged equity valuations, particularly for the richly priced tech sector, in a week packed with central bank meetings and major economic data.

The Federal Reserve will lead the pack on Wednesday with markets pricing a 96% probability it will cut rates by 25 basis points to a new range of 4.25% to 4.50%.

More important will be any guidance on future easing, including the “dot plot” forecasts of Fed members for rates over the next couple of years.

MSCI’s broadest index of Asia-Pacific shares outside Japan was little changed, having been flat last week.

Japan’s Nikkei edged up 0.1%, while South Korea steadied on pledges of government support.

A range of surveys on global manufacturing are also due on Monday, while US retail sales will be released on Tuesday and a major inflation report on Friday.