https://arab.news/7j8dg
- Rupee stability, falling bank lending rates played catalyst role in the market’s bullish activity, analyst says
- Pakistan Stock Exchange has witnessed bullish trend since last Monday when government slashed policy rate
ISLAMABAD: The Pakistan Stock Exchange (PSX) on Monday breached the 94,000-point mark but retreated by more than 370 points to still close at a record high, with analysts attributing the bullish trend to rupee’s stability and the government’s move to slash the policy rate.
The KSE-100 index rose to a record 94,020 points, a level never seen before in PSX history, during the intraday trading, but closed at 93,648 points. The index was still up by more than 350 points from the previous day’s close of 93,291 points.
The Pakistani stock market has been experiencing a bullish trend since last week which was evident when it breached the 93,000-point barrier for the first time on Friday.
Ahsan Mehanti of Arif Habib Corporation told Arab News the bullish trend was led by blue chip companies after American finance company, MSCI, revised Pakistan’s expected standard index weight for November to 4.4 percent. The MSCI, in its latest review this month, announced the addition of eight Pakistani companies to its Frontier Market Small Cap Index.
“Rupee stability and falling bank lending rates following a slump in government bond yields played a catalyst role in bullish activity at PSX,” Mehanti told Arab News via text.
The bullish trend has been observed in the stock market since last Monday when Pakistan’s central bank cut its key policy rate by 250 basis points, bringing it to 15 percent. This was the fourth straight reduction since June, as the country keeps up efforts to revive a sluggish economy with inflation easing.
Pakistan continues to enjoy record gains in the stock market as its economic indicators continue to improve after Islamabad secured a 37-month, $7 billion bailout from the International Monetary Fund (IMF) in September.
Last year, Pakistan narrowly avoided a sovereign default when it clinched a last-gasp $3 billion IMF bailout deal. The country has suffered a prolonged economic crisis that drained its foreign exchange reserves and saw its currency weaken amid double-digit inflation.