- The KSE-100 index recovered and closed at 114,037.79.
- The benchmark index gained 594 points, or 0.52%.
- Intraday high 114,319.62, low 113,234.31.
The stock market rallied on Thursday, driven by renewed buyer interest in the cement sector and expectations of a further cut in interest rates at the upcoming Monetary Policy Committee (MPC) meeting.
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 index gained 594.36 points, or 0.52 percent, to close at 114,037.79, recovering from losses in the previous session. During the session, the index hit an intraday high of 114,319.62 and fell to a low of 113,234.31.
“Momentum is driven by the cement sector, partly due to expectations of a further cut in interest rates in the next MPC,” said Muhammad Saad Ali, head of research at Intermarket Securities Ltd.
“Yesterday’s Treasury bond auction reinforced hopes of a reduction of at least 100 basis points,” he added.
Treasury yields fell in Wednesday’s auction, further fueling expectations for monetary easing. The government raised 326 billion rupees, short of the target of 350 billion rupees, with yields falling by 20-41 basis points across different maturities. Yields now stand at 11.58% for three-month paper, 11.4% for six-month paper and 11.38% for 12-month paper.
The auction attracted significant investor interest, with participation reaching Rs1.4 trillion for maturities worth Rs515 billion. Analysts believe this reinforces market anticipation of a 100 basis point cut in the State Bank of Pakistan’s (SBP) policy review on January 27, as inflation continues to fall.
Pakistan’s Consumer Price Index (CPI) for January is expected to decline to 2.8%, its lowest level since November 2015, despite a monthly increase of 0.6%.
The average inflation rate for the first seven months of FY25 is expected to be 6.7%, significantly lower than the average of 28.7% during the same period last year. This trend argues in favor of further monetary easing, which could further stimulate the stock market.
On Monday, the National Assembly was informed of the government’s plans to address structural inefficiencies in the tax system, combat the underground economy and broaden the tax base.
Minister of State for Finance Ali Pervaiz Malik has highlighted reforms as a key priority with Prime Minister Shehbaz Sharif approving a plan to transform the Federal Board of Revenue (FBR). These reforms aim to strengthen fiscal discipline and improve revenue collection mechanisms.
The PSX closed sharply lower on Wednesday as concerns over the 2024 Tax Laws Amendment Bill continued to weigh on investor confidence. The legislation, which prohibits non-filers from trading beyond specified limits, has sparked apprehension among market participants.
The KSE-100 index fell 1,598.82 points, or 1.39 percent, to close at 113,443.43. The index recorded an intraday high of 115,256.16 and a low of 113,359.38.
As investors keep an eye on the January 27 monetary policy review, market dynamics will likely depend on signals from the SBP regarding interest rate adjustments.
