ISLAMABAD: Bulls once again displayed their horns at the Pakistan Stock Exchange (PSX) on Monday after it dropped to close at 114,301.80 points on the last day of the weekend.
During early trading, the benchmark KSE-100 Index soared by 1,525.14 points, or 1.33%, reaching an intraday high of 115,826.94 from Friday’s 114,301.80 points.
This uptick follows a record-breaking performance last week, driven by expectations of a potential policy rate cut by the State Bank of Pakistan (SBP) and improving economic indicators.
Meanwhile, the Pakistan Stock Exchange excitement is also boosted by an expected announcement from the Monetary Policy Committee (MPC) regarding the rate cut ranging between 200-500 basis points. Business tycoons are urging that it be done on a larger scale since it will help improve economic growth while analysts believe there may be a more subdued adjustment.
The most recent data shows that inflation for November dropped to 4.9%, thus generating a positive real interest rate of 10%, which leaves much more room for monetary policy easing.
The most possible shift of the funds from savings to equity will occur as the government recently cut 250 basis points in Savings Account returns on the revised National Savings Schemes (NSS) profit rates.
Foreign inflows, too, have caused the market to go bullish. Rising remittances by 29% YOY to $2.9 billion in November would help maintain the balance on foreign reserves which remained at $16.6 billion as of December 6, 2024.
The SBP had reserves of $12.051 billion, the highest since March 2022.
Current Account Deficit (CAD) has declined by 79 percent year-on-year to $217 million in the first two months of FY 2025, mainly due to impressive remittance flows and continuous earnings from exports.
Exports are projected to hit $33 billion by the end of FY2025, while remittances are expected to rise to $33.5 billion.
