PSX surges in anticipation of no change in policy rate

The Pakistan Stock Exchange (PSX) reversed course on Monday following two days of profit-taking as investors widely anticipated that the State Bank of Pakistan’s monetary policy committee (MPC) would leave policy rate on hold at 11%.

Triggered by investor interest in selective stocks of banking, cement, fertiliser and energy sectors, the benchmark KSE-100 index closed higher by 944.82 points, or 0.61%, at 155,384.51.

In the evening, the central bank, in line with expectations, kept the policy rate unchanged as inflationary pressure was feared to intensify following heavy rainfalls and floods in the country, which have damaged crops and livelihoods over vast swathes of the country. The State Bank’s decision would dispel uncertainty and provide a boost to investor sentiment.

On Monday, the market staged a strong comeback after dipping below the 155,000 level in the previous session. During the session, the KSE-100 touched the intra-day low of 154,486 before hitting the day’s high at 155,602. Active buying was observed in major sectors such as commercial banks, fertiliser and power generation.

The market expected the MPC to maintain its cautious stance in upcoming meetings as it seeks to strike a balance between inflation control and economic stability. With the policy uncertainty lifted, the investors are likely to focus on sector-specific performance, corporate earnings and macroeconomic indicators in the near term.

Talking to The Express Tribune, JS Global Head of Equity Research Waqas Ghani said that despite lingering concerns over fiscal pressures and external vulnerabilities, the steady policy stance provided much-needed clarity to investors, which “helped set a constructive tone in the market.”

KTrade Securities wrote in its market wrap that the PSX closed on a positive note as the benchmark index gained 945 points. The rally was driven by strong performances in Fauji Fertiliser, United Bank Ltd, Hub Power, TRG Pakistan, National Bank, DG Khan Cement and Maple Leaf Cement.

Market sentiment hinged on the monetary policy announcement later in the day. In line with expectations, the central bank left the policy rate unchanged at 11%, providing further clarity to investors, it said.

Trading activity remained robust and the PSX continued to demonstrate resilience, reflecting investor confidence in Pakistan’s long-term economic trajectory. The optimism was supported by improved corporate earnings. However, some short-term consolidation is likely in the coming sessions as the market absorbs recent gains and prepares for futures contract rollovers, KTrade added.

Overall trading volumes dropped to 857.6 million shares versus previous tally of 987.6 million. Total traded value came in at Rs32.7 billion.

Shares of 482 companies were traded. Of these, 243 stocks closed higher, 205 dropped and 34 remained unchanged. Pace Pakistan was the volume leader with trading in 77.8 million shares, rising one rupee to close at Rs8.47.