The Pakistan Stock Exchange (PSX) maintained its bullish momentum on Monday as the benchmark KSE-100 index surged 1,248.84 points, or 1.23 per cent, to reach 102,606.16 points in intraday trading by 11:06AM. The rally came amid investor optimism over a potential dip in November’s inflation rate and its implications for interest rates.
Yousuf M. Farooq, Director of Research at Chase Securities, attributed the market’s rise to expectations of inflation easing below 6pc, with some forecasts suggesting it might even drop under 5pc.
“Lower inflation is expected to pave the way for reduced interest rates,” said Farooq. “We now anticipate rates falling to single digits within the next year, which could significantly enhance stock market valuations.”
Farooq highlighted that certain sectors, such as automobiles, are already witnessing positive growth. Recent data shows automobile sales jumped 27pc month-on-month and an impressive 112pc year-on-year in October, driven by increased demand linked to declining interest rates.
For retail investors, Farooq advised adopting a long-term strategy: “Stay focused on compounding by investing small, consistent amounts each month in line with your risk tolerance, rather than reacting to short-term market movements.”
Adding to the optimism, Awais Ashraf, Director of Research at AKD Securities, pointed to improved investor confidence in government-owned companies, spurred by expectations of structural reforms and stabilising macroeconomic indicators.
Ashraf also noted that the upcoming Monetary Policy Committee (MPC) meeting could see a rate cut if inflation falls as projected. “The possibility of inflation dropping below 5pc in November has kept equities in the spotlight,” he added.
The surge underscores growing investor confidence in the market’s trajectory, bolstered by a favorable macroeconomic outlook and anticipation of policy adjustments.
