Shares at PSX climb 400 points in intraday trade

The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 index soared by over 700 points on Friday on hopes of a cut in the key policy rate.

The benchmark KSE-100 index gained 771.34 points, or 1.07 per cent, to stand at 72,742.74 points at the day’s close from the previous close of 71,971.40.

Yousuf M Farooq, director of research at Chase Securities, said the market “is building in expectations of a rate cut”.

The State Bank of Pakistan (SBP)’s monetary policy committee (MPC) will meet on April 29 to take a decision regarding the key interest rate policy. Last month, the committee had chosen to maintain the status quo by upholding the key policy rate at 22 per cent for the sixth policy meeting in a row.

A Topline Securities survey from last week stated that 51pc of participants expect the policy rate will remain unchanged at 22pc, while the remaining 49pc anticipate a policy rate cut.

“We believe that the SBP will maintain cautious approach despite the above encouraging trends and adopt a ‘watch and see’ approach until the inflation trend maintain its fall,” the brokerage firm said.

Speaking to Dawn.com, Farooq noted that the sensitive price index was down 1.1 per cent this week while most analysts were expecting inflation to clock in between 17-18pc.

“Lower interest rates translate into higher stock prices,” he said.

Shahbaz Ashraf, chief investment officer at FRIM Ventures, observed that there were a “handful of reasons that summarise the current market performance”.

“The blue-chip sectors are unveiling a wave of encouraging results and payouts,” he said.

Moreover, Ashraf highlighted that all eyes were now set on the impending monetary policy announcement.

“Expectations are running high for a rate cut — even if symbolic — as inflation sees a sharp decline below the policy rate,” he noted, adding that “real interest rates remain positive both in the present and in the foreseeable future”.

Tahir Abbas, head of research at Arif Habib Limited, echoed the same sentiments. “Market is continuing it’s bullish momentum amid expectations of interest rate cut in the upcoming monetary policy on Monday,” he said.