The Pakistan Stock Exchange (PSX) rallied strongly on Tuesday as investors welcomed a larger-than-expected interest rate cut by the State Bank of Pakistan (SBP). The benchmark KSE-100 Index soared nearly 685 points intraday, touching 114,787.14 before settling slightly lower in the afternoon session. This marked a 0.6% rise as traders responded positively to the monetary policy shift.
The SBP’s Monetary Policy Committee announced a 100 basis point reduction, bringing the key policy rate down to 11%. Most analysts had expected a smaller 50bps cut, making the central bank’s move a positive surprise for markets. Analysts said the easing signals growing confidence in inflation control and a bid to support economic growth.
Major sectors saw strong buying interest, with gains in blue-chip companies like HUBCO, MCB, OGDC, PSO, and NBP. Interest-sensitive sectors — such as cement, auto, and banking — led the advance, as lower borrowing costs are expected to lift their profits in the coming quarters.
This rally followed a volatile Monday session, during which the market had dropped by over 1,000 points before closing flat. The sharp rebound indicates investor confidence is returning, driven by expectations of better corporate earnings and improved liquidity conditions.
Globally, markets remained cautious due to concerns over U.S. trade policies and low crude oil prices. However, local sentiment appears to be decoupling from international trends, at least in the short term, as investors focus on domestic policy signals.