KSE-100 climbs nearly 1,500 points as positive sentiment regains control

Pakistan Stock Exchange witnessed a key bounce Thursday as benchmark KSE-100 Index surged nearly 1,500 points buoyed by better macroeconomic indicators and an unexpectedly sharper interest rate cut by the US Federal Reserve.

By 12:10 PM, KSE-100 had zoomed up to 81,920.11 with a gain of 1,458.78 points or 1.81%. It even crossed the 82,000 barrier at various moments during trading indicating strong investor optimism.
Commercial banks, cement, oil and gas exploration, and oil marketing sectors were actively on the buying list where the index heavyweights SSGC, OGDC, PPL, POL, HBL, MCB and MEBL traded in the green.

Market analysts attribute this positive trend to several factors. According to Sana Tawfik, Head of Research at Arif Habib Limited (AHL), the Fed’s half-a-percentage-point cut in interest rates saw influence. The fact that the rate cut was bigger than usual reflects growing concerns about the job market and, therefore, talk of a prolonged easing of monetary policy.

The committee has gained greater confidence that inflation is moving sustainably toward 2%, and judges the risks to achieving its employment and inflation goals as roughly in balance, the Fed’s rate-setting committee said in its latest remarks.

But it is not just the significant reduction in global macroeconomic problems that is improving the market sentiment: improvement in local macroeconomic indicators, such as current account surplus for August 2024 standing at $75 million up from the deficit of $152 million last year for the same month, continues to reinforce positive market sentiment.

Tawfik further said optimism regarding the developments with the International Monetary Fund (IMF) is adding more strength to the market, especially as the Executive Board of IMF will deliberate over funding for Pakistan on September 25. The board will examine Pakistan’s 37-month Extended Fund Facility with around $7 billion.

On the previous day, the KSE-100 Index had settled at 80,461.34, with a gain of 970.20 points or 1.22%. The current momentum suggests a continuation of the positive outlook in the coming days.