Karachi Stock Exchange ends on 7-week high, rupee flat

Karachi Stock Exchange (KSE) ended over a month-and-a-half high on Wednesday on expectations the central bank may again cut its key policy rate after data showed inflation increased less than expected in August, dealers said.

The State Bank of Pakistan (SBP) is due to unveil monetary policy for the next two months on October 8.

The KSE benchmark 100-share index rose 2.86 percent or 329.11 points to end at 11,851.98, its highest close since August 3.

Volume was 117.13 million shares, compared with 31.2 million shares traded on Tuesday.

“Bullish activity were witnessed in scripts across the board with rising volumes on investor hopes for easing of the SBP monetary policy stance after new base CPI inflation stood at 11.56 percent Year-on-Year ahead of the policy announcement next month,” said Ahsan Mehanti, director at Arif Habib Investments.

Pakistan’s consumer price index (CPI), a key indicator of inflation, rose 11.56 percent in August from a year ago, the Federal Bureau of Statistics said on Tuesday.

The CPI was up 1.40 percent from July, when it rose 13.77 percent year on year.

Analysts said the data raised the possibility of another rate cut. The central bank lowered its policy rate by 50 basis points to 13.50 percent in July.

In the currency market, the rupee was flat at 87.72/78 to the dollar, unchanged from the previous day’s close.

Increases in import payments and a negative economic outlook will also continue to keep the local unit under pressure, dealers say.

In the money market, overnight rates also fell to end between 11.0 percent and 11.15 percent — compared with Tuesday’s close of 13.0 percent — on hopes of a cut in the key policy rate next month.