The Pakistan Stock Exchange (PSX) witnessed a modest recovery on Friday, buoyed by improved investor sentiment following a global credit rating upgrade and growing expectations of an interest rate cut.
The benchmark KSE-100 index gained 505.76 points, or 0.36%, reaching 139,198.42 points before trading was temporarily suspended for the Friday prayer break. This positive movement followed a bearish session on Thursday, during which the index dropped by 561.69 points (0.40%), closing at 138,692.67.
Market experts noted that investors are cautiously optimistic, keeping a close eye on macroeconomic indicators and upcoming policy decisions amid lingering uncertainty.
S&P Global Upgrades Pakistan’s Sovereign Credit Rating
Adding to the positive market sentiment, S&P Global Ratings upgraded Pakistan’s sovereign credit rating from ‘CCC+’ to ‘B-’, with a stable outlook, citing strengthened foreign reserves and improved fiscal stability backed by IMF support.
“The stable outlook reflects our expectations that continued economic recovery and government efforts to enhance revenue will stabilise fiscal and debt metrics,” S&P said in its statement.
The agency also expressed confidence that Pakistan will be able to meet its external obligations and continue rolling over commercial debt in the coming year.
The upgrade triggered a rally in Pakistan’s longer-dated international bonds. The 2051 maturity bond rose 1.6 cents, reaching 84.85 cents on the dollar, while the 2031 and 2036 maturities also saw gains of around 1 cent.
Interest Rate Cut Expected on July 30
Further bolstering optimism, a majority of financial market participants now anticipate a 50 to 100 basis points reduction in the key interest rate at the upcoming Monetary Policy Committee (MPC) meeting scheduled for July 30, according to a poll conducted by Topline Securities.
This follows signs of easing inflation and falling global oil prices, which analysts believe give the State Bank of Pakistan (SBP) more room to initiate monetary easing.
In its last policy meeting, the SBP held the rate steady at 11%, citing budget uncertainties and geopolitical tensions. However, sentiment has since improved, with a growing consensus that the time is now ripe for a rate cut.
With a combination of improved credit ratings, a stable economic outlook, and expectations of a looser monetary policy, the PSX appears poised for a more sustained recovery — provided macroeconomic stability is maintained in the coming months.
