PSX KSE-100 index gains 1,428 points to 164,467: why the market rallied after the rate hike

“PSX KSE 100 index gains” was one of the top searches in Pakistan on Tuesday night, and the numbers explain why. The benchmark KSE-100 closed at 164,467.20 on Tuesday, October 27, up 1,428.73 points (0.88%), its second gain in a row, Business Recorder reported. It touched 164,787.67 during the day.

Why did the KSE-100 go up?

Three things came together, according to brokerages quoted by Dawn and Business Recorder.

• A smaller-than-feared rate hike. The State Bank raised its policy rate by 50 basis points to 12% on Monday. Some investors had braced for a full 100bps, so the smaller move read as a balancing act rather than a shock, Dawn reported. Topline Securities described it as “renewed buying interest despite” the hike.
• Peace talks. Officials from Pakistan, Saudi Arabia and Türkiye held high-level talks in Iran, and the four countries agreed to keep talking. That eased some of the war fear that has hung over the market for weeks.
• Cheaper crude and a better mood abroad. Oil eased, and Asian markets rose after Anthropic filed for a US share listing and Meta announced plans for a large equity raise, Business Recorder noted.

Ali Najib, deputy head of trading at Arif Habib Ltd, said the index “closed near its intraday highs, reclaiming the 164,000 level”.

Which shares led the rally?

Cement, car makers and banks did the lifting. MCB Bank, Fauji Fertilizer, United Bank, Pakistan Petroleum and National Bank together added about 490 points to the index. Fauji Cement, Maple Leaf Cement, Ghandhara Automobiles, Ghandhara Industries, Pakistan International Bulk Terminal and Cnergyico were in focus on earnings news.

More people traded, too: volume rose to about 402 million shares from 376 million, and traded value went up to Rs18.07 billion. Of 497 companies traded, 282 closed higher and 170 lower. K-Electric was the most traded stock, with 54 million shares changing hands.

Is this a recovery from last week’s fall?

Partly. On October 22 the index dropped more than 2,000 points on Iran tensions, as we reported then. Monday added 663 points and Tuesday 1,428, so most of the war-scare loss has been won back, but the market is moving on headlines from the Gulf, not on a settled outlook.

What does it mean if you don’t own shares?

Not much directly. A rising index mainly tells you big investors are less worried this week. The same rate hike that the market shrugged off means slightly higher costs for anyone with a car loan or a business loan linked to KIBOR. The rupee barely moved, closing at 276.80 to the dollar.

Brokers expect “selective buying” to carry the market in the near term, with volatility still likely, Dawn reported. The next tests are company results this week and any news from the talks with Iran.