Bulls maintained control of the trading floor as shares at the Pakistan Stock Exchange (PSX) climbed 500 points on Monday ahead of the central bank’s Monetary Policy Committee (MPC) meeting on January 27.
The benchmark KSE-100 index climbed 817.68 points, or 0.71 per cent, to stand at 116,089.76 points from the previous close of 115,272.08 at 2:29pm.
Finally, the index closed at 115,844.81, up by 572.73 or 0.5pc, from the last close.
Mohammed Sohail, chief executive of Topline Securities, attributed the upward trajectory to “signs of political stability, along with expectations of another rate cut, helping sentiments”.
Awais Ashraf, director research at AKD Securities, said, “The resolution of political uncertainty following the verdict in a graft case has boosted investor confidence.
“Investors are optimistic about an improving economic outlook and are expecting a potential reduction in the policy rate during the upcoming Monetary Policy Committee (MPC) meeting,” he added.
Ashraf noted that a record number of accounts had opened at the PSX over the past three months, highlighting “the growing trust of individual Pakistanis in the improving economic conditions and their increasing propensity to save amid government drive of documentation”.
“This sentiment is reflected in record individual buying activity, amounting to $22.1 million this month,” he said.
The State Bank of Pakistan (SBP)’s MPC is due to meet on Jan 27 to decide on its key interest rate.
In a survey of market participants conducted by Topline Securities, a brokerage firm in Karachi, it was noted that 61pc of participants expected a rate cut of 100 basis points (bps).
Among the remaining participants, 17pc anticipated a rate cut of 200bps, 7pc expected a rate cut of 150bps, and 6pc of the participants expected no change in the monetary policy.
“In our view, participants are expecting a rate cut due to high real rates of 950bps in Jan 2025 compared to [the] historic average of 200-300bps, despite 900bps cut in total interest rates in last five consecutive meetings since June 2024,” the brokerage firm said.
Furthermore, it highlighted that real rates are high as the monthly inflation reading for January 2025 was expected to clock in at around 3.5pc on the back of faster food disinflation and negative electricity prices adjustments (FCA).
Separately, European and Asian stock markets rose on Monday and bitcoin soared to a new high as Donald Trump prepared to re-enter office as president of the world’s biggest economy.
The dollar traded mixed against main rivals, while oil prices slipped.
Bitcoin hit a record above $109,000 as Trump, who has signalled plans to deregulate the cryptocurrency sector, prepares to be sworn in as US president.
Over the weekend, Trump launched his own cryptocurrency, a so-called meme coin appropriately called $TRUMP, sparking feverish buying that sent its market capitalisation soaring to several billion dollars.
“Markets are beating to the drum of Donald Trump on the day of his return to the White House,” noted Russ Mould, investment director at AJ Bell.