KEY POINTS
- Pakistan’s main stock index rises nearly 2% to a fresh all-time high
- Investors position for a possible interest rate cut later this month
- Banking, energy and fertiliser shares lead the rally
- Trading activity and volumes pick up sharply
ISLAMABAD: Pakistan’s stock market surged to a new record high on Monday, extending a strong start to the year as investors piled into shares on expectations that borrowing costs could fall further in the coming weeks.
The benchmark (Karachi Stock Exchange) KSE-100 Index, which tracks the country’s largest and oldest listed companies, closed at 182,408 points, first time in the history of the bourse.
The Index bagged 3,373 points, or almost 2 per cent, in a single session over the previous one on Friday.
During the day, the index briefly climbed to an intraday peak of nearly 184,000 points before easing slightly toward the close.
Early profit-taking and correction sentiment pulled the market down before the close, but it still stayed at a new high with a gain of a couple of per cent.
Market participants said renewed optimism about the economy and easing inflation have encouraged both local institutions and individual investors to increase their exposure to equities.
The rally follows a sharp advance last week, when the index rose by almost 4 per cent and ended at a then record high. So far, the market has had only two working sessions in the New Year, and both were exemplary.
Expectations of a further reduction in Pakistan’s key interest rate have been a major driver of sentiment.
The central bank cut rates in its previous policy meeting, and investors are now betting on another cut of up to half a percentage point to one per cent when the Monetary Policy Committee meets later this month.
Lower interest rates typically make stocks more attractive by reducing returns on fixed-income investments and easing financing costs for companies.
Gains on Monday were widespread, with major banks, fertiliser producers and energy firms among the top performers.
Heavyweights from these sectors contributed most to the index’s rise, reflecting confidence in earnings prospects if borrowing costs continue to fall.
Trading activity also picked up noticeably. More than 1.3 billion shares changed hands across the market, compared with just over 1.1 billion in the previous session, and the total value of shares traded rose to about Rs 78 billion.
Advancing stocks outnumbered losing ones, highlighting the strength of the buying interest.
For international investors, the rally underscores Pakistan’s position as one of the better-performing equity markets in the region over recent months.
The market has benefited from slowing inflation, relative currency stability and signs of improved corporate profitability, even as the broader economy continues to face external financing challenges.
Analysts caution that near-term volatility cannot be ruled out, particularly around the upcoming policy decision and global market developments. Still, many say the current momentum reflects growing confidence.
From an investor’s point of view, the worst of Pakistan’s economic stress may be easing, encouraging both short-term and direct investments with a more positive outlook for the local equities.
