KARACHI (Web Desk) – The benchmark KSE-100 Index surged 1.30 per cent, or 869.77 after a more than expected decline in inflation boosted the hopes that the State Bank of Pakistan may opt for interest rate cuts, as investors around the country are anxiously awaiting reduction in the skyrocketing cost of doing business.
During the process, the KSE-100 Index also set a new milestone by crossing the 67,000 mark for first time in its history.
Earlier, the consumer price Index (CPI) for March witnessed a 20.7pc year-on-year increase, which is the lowest inflation reading since May 2022 when it was recorded at 13.8pc.
The decrease in March CPI is sharper than what the International Monetary Fund (IMF) and the central bank had projected, as they had said that the inflation would slow in the last quarter of the current financial year.
However, there is a caveat. But the latest energy tariff hikes as well as the increase in fuel prices could have damaging effects by propelling the input and transportation costs, which may be reflected in food prices.
By the time trading was closed for the day, the Pakistan Stock Exchange saw its benchmark index recorded at 67,756.03 against the yesterday’s level of 66,886.26.
Meanwhile, there is another factor boosting the investors’ confidence: the progress made in the privatisation of PIA – the national flag carrier – which will automatically increase the likelihood of another deal with the International Monetary Fund (IMF).
Read more: Bids from interested parties invited for PIA privatisation
However, one has to remember that most the top performing stocks are still undervalued when the historic high these had reached in 2016-17, meaning that the rising benchmark isn’t still being reflected in market capitalisation.
As far as the interest rate cuts are concerned, global markets became jittery after latest data showed US manufacturing unexpectedly rebounded, with the rise in raw materials prices triggering fears that inflation could resurge.
Read more: Safe-haven gold smashes record again as US inflation worries loom
That’s why gold prices in international extended a record run on Wednesday as concerns of rising inflation boosted demand for gold as a hedge.