Buoyed by inflation dip, PSX tops 104,000 as rate cut bets gain traction
The capital market sustained its record-breaking momentum on Tuesday, propelled by growing economic optimism and a dramatic drop in inflation, which has invigorated investor confidence.
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Shares Index surged further, adding 1,086.3 points, or 0.48%, to hit a new intraday high of 104,361.24, with investor sentiment buoyed by a record drop in inflation and hopes for continued economic reforms.
The market’s exceptional performance underscores the transformative impact of stabilising macroeconomic conditions and mounting expectations of significant monetary easing, setting a strong foundation for sustained growth.
The day’s trading began on a ceremonial note as Federal Minister for Planning Ahsan Iqbal rang the traditional gong to commence trading at the PSX.
During the event, Ahsan Iqbal highlighted the government’s commitment to economic stability and long-term growth. “Crossing the 100,000 mark in the 100-Index showcases Pakistan’s potential to the world,” he said.
“Inflation has dropped from 38% to below 5% in two years, and the stock market has soared from 30,000 to 100,000 points,” he noted, highlighting the PSX as one of the most successful markets globally.
PSX Chairperson Dr Shamshad Akhtar highlighted the significance of Pakistan’s robust capital market and its recent achievements.
“Crossing 100,000 points last week has brought renewed enthusiasm to the market,” she said, adding that the PSX’s ability to finance long-term developmental projects makes it a critical asset for Pakistan’s economic future.
Reflecting on the market’s performance, Dr Akhtar pointed out that the PSX has delivered a 7% return in dollar terms over the past five years.
A significant factor in today’s rally was Prime Minister Shehbaz Sharif’s optimism regarding a potential reduction in the key policy rate by the State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) in its upcoming meeting, which analysts believe will provide further impetus to the equity markets.
Addressing a federal cabinet session on Monday, expressed optimism about a further reduction in the SBP’s policy rate.
The premier highlighted the 4.9% inflation rate recorded in November — the lowest in six-and-a-half years — as a game-changer for the country’s economic landscape.
Inflation data released by the Pakistan Bureau of Statistics (PBS) showed a significant slowdown, beating forecasts of 5.8%-6.8%.
“It is beyond imagination,” said the Prime Minister, recalling inflation levels of 3.5% during the previous tenure of the Pakistan Muslim League-Nawaz (PML-N).
Analysts note that the cooling price pressures reflect a mix of improved monetary measures and stabilising economic fundamentals and view this as a clear signal of easing price pressures, which could prompt the SBP to cut interest rates further, creating a more conducive environment for equity markets.
Monday’s session set the tone for today’s rally, with the KSE-100 gaining 1,917.62 points to close at a record 103,274.94.
Sectors like banking, technology, and oil and gas exploration led the gains last, with banking stocks benefitting significantly from recent regulatory changes, such as the removal of the Minimum Deposit Rate (MDR) requirement for corporate deposits.
As the PSX continues to explore unprecedented territory, market analysts anticipate sustained growth, supported by consistent policy measures, stabilised external accounts, and reduced costs of doing business.
