The Pakistan Stock Exchange (PSX) bounced back sharply on Tuesday, reversing two consecutive sessions of losses, as investor confidence surged following the State Bank of Pakistan’s (SBP) decision to keep the benchmark interest rate unchanged at 11%.
The KSE-100 Index gained 1,195 points in early trade to reach 163,359.39, with buying interest seen across key sectors including banking, cement, oil and gas exploration, power, and refinery.
Market analysts said the decision to maintain the policy rate — widely anticipated by investors — signaled monetary stability and policy continuity, providing the much-needed boost to the local bourse.
“Investors were reassured by the SBP’s confidence in the economy and its assessment that inflationary risks are manageable,” said one brokerage analyst. “This has encouraged renewed buying across cyclical and index-heavy stocks.”
The Monetary Policy Committee (MPC) noted in its statement on Monday that the economy was showing signs of recovery, while the recent floods had caused less disruption than initially feared. Inflation, however, rose to 5.6% in September, compared to 3% in August.
Stocks such as HUBCO, PPL, POL, SNGPL, MCB, and UBL contributed majorly to the index’s rise, while overall trading volumes spiked in early hours as investors repositioned their portfolios for the upcoming results season.
On Monday, the PSX had fallen 1,140 points amid heavy profit-taking and pre-policy uncertainty.
In the regional context, Asian equity markets traded mixed on Tuesday as investors awaited key U.S. Federal Reserve and Bank of Canada policy announcements later this week.
Analysts at Arif Habib Limited said that while inflationary pressures remain, the status quo decision reflected confidence that current monetary settings are appropriate to sustain economic growth.
“Stability in policy rates will help maintain momentum in industrial and financial activity,” they added.
Meanwhile, global commodity markets showed a mixed trend, with gold stabilizing near $4,000 an ounce and oil prices fluctuating amid renewed supply concerns.
Market participants expect the PSX to stay positive in the near term, supported by improving economic indicators, foreign inflows, and clarity on the IMF program.
