KSE-100 crosses 116,000 with 2,000-point gain as investors anticipate further policy rate cut

The Pakistan Stock Exchange (PSX) started trading with significant gains, as the benchmark KSE-100 Index surged over 2,000 points during intraday trading on Monday, crossing the 116,000 level.

At 12:45pm, the benchmark index was hovering at 116,476.00, an increase of 2,174.20 points or 1.90%.

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

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

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

The State Bank of Pakistan (SBP) will hold its last MPC of the year to decide the monetary policy. Later on, the SBP will issue the Monetary Policy Statement (MPS) the same day.

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 by the central bank that began in June 2024.

During the previous week, the PSX continued its record-breaking trend and hit new historic highest-ever 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.

This is an intra-day update