PSX Closes Higher Amid Strong Investor Sent
PSX Rally: Optimism Rises on Rate Cut Hopes and Credit Rating Boost. The Pakistan Stock Exchange (PSX) wrapped up the week on a high note, with the KSE-100 index climbing by 515 points or 0.37%, settling at 139,207 by the close of trading on Friday. The rally was powered by rising expectations of a potential interest rate cut in the upcoming monetary policy announcement and a significant improvement in investor outlook following a sovereign credit rating upgrade by a leading global agency.
Investors showed renewed confidence, selectively buying stocks likely to benefit from a softer interest rate environment. This bullish undertone also extended to Pakistan’s international bond market, where sentiment received a lift thanks to upgraded fiscal indicators.
Positive Momentum in the Stock Market
Overview of Friday’s Market Performance
Friday’s trading session at the PSX was marked by optimism and cautious buying, as participants anticipated favorable macroeconomic shifts. The benchmark index opened on a steady note and quickly gained ground as blue-chip stocks attracted attention.
By the end of the day, the KSE-100 index had gained 515 points, ending at 139,207. This upward movement marked the fifth consecutive weekly gain for the index—a clear sign of sustained bullish sentiment in the market.
Despite a slight decline in total market activity, the underlying tone remained upbeat. Traders were selective but active, placing bets on stocks expected to perform well under a potentially looser monetary regime.
Key Factors Fueling the Bullish Mood
The market’s positive performance can be attributed to two major developments:
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Expectations of a 50bps interest rate cut, which could lower borrowing costs and boost corporate earnings.
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Standard & Poor’s upgrade of Pakistan’s credit rating from a negative to a stable outlook, underscoring renewed confidence in the country’s economic direction.
Together, these factors created an ideal backdrop for investor optimism, allowing the index to gain despite muted volumes.
Interest Rate Speculations Drive Selective Buying
Anticipation Ahead of Monetary Policy Decision
Investors are closely watching the State Bank of Pakistan’s monetary policy announcement scheduled for July 30. According to a market survey conducted by Arif Habib Ltd (AHL), many are pricing in a possible 50 basis points rate cut, encouraged by signs of easing inflation.
This anticipation has sparked fresh buying in interest rate-sensitive sectors like banking, construction, and manufacturing, as businesses stand to benefit from lower capital costs.
Impact of Inflation Trends and Oil Prices
Ali Najib, Deputy Head of Trading at AHL, pointed out that falling inflation figures and a consistent decline in international oil prices are enhancing expectations of monetary relief. These developments are seen as strong catalysts for reviving economic momentum, leading to greater investor participation at the bourse.
Moreover, if inflation continues on its current trajectory, the central bank may have enough room to adjust policy rates without jeopardizing macroeconomic stability.
Credit Rating Upgrade Boosts Confidence
S&P’s Revised Rating and Outlook
Global ratings agency Standard & Poor’s delivered a confidence boost by upgrading Pakistan’s sovereign credit rating to ‘B-’ with a stable outlook. The upgrade reflects improved fiscal indicators and ongoing engagement with the International Monetary Fund (IMF), both of which are considered critical for long-term financial sustainability.
The revised rating signals a reduction in perceived investment risk, which can help attract both foreign portfolio investment and bond market inflows.
Influence on Global Perception and Bond Markets
This positive revision has already had an impact. Prices of Pakistan’s long-dated bonds in the international market climbed, reflecting increased global confidence in the country’s fiscal management and future repayment capacity.
Such global recognition not only improves Pakistan’s borrowing terms but also reassures domestic investors that the country’s financial fundamentals are strengthening.
Stock-wise Contribution to KSE-100 Surge
Gainers and Their Impact
Several heavyweight stocks were instrumental in driving the KSE-100 index higher. Leading the charge were:
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Engro Corporation (ENGROH)
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United Bank Limited (UBL)
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Lucky Cement (LUCK)
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Meezan Bank (MEBL)
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National Bank of Pakistan (NBP)
Collectively, these five stocks contributed an impressive 492 points to the day’s index gain, highlighting the influence of key sectors like finance, manufacturing, and energy.
Decliners and Market Drag
Not all stocks shared the upward momentum. Declines in notable players such as:
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Habib Bank Limited (HBL)
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Allied Bank Limited (ABL)
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MCB Bank (MCB)
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Pakistan Services Ltd (PSEL)
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Service Industries Ltd (SRVI)
Together, these underperformers pulled the index down by 141 points, partially offsetting the day’s gains.
