Expert anticipates PSX performance to bolster as interest rate declines

• It is expected that the rate of interest and inflation would fall in the coming year, says NBP Funds CEO.
• Decline of Current Account Deficit, decline in imports combined with an uptick in exports was a positive indicator for the stock market.

Pakistan Stock Exchange (PSX) has been enjoying a period of revitalization in the coming months, jumping from 34,000 points in July to over 40,000 points in January, with more improvement expected.

A financial expert believes that the situation would boom further as economic situation improves and interest rate declines in coming months. “It is expected that the rate of interest and inflation would fall in the coming year, which would increase the economic activities,” said Chief Executive Officer (CEO) NBP Funds, Amjad Waheed.

The NBP Funds chief said that Large Scale Manufacturing (LSM) sector that at the moment is languishing would perform better as well. He added that the expected decrease in interest rates would help further improve the stock market performance.

Highlighting the factors behind positive performance of PSX, the expert said that the decline of Current Account Deficit, decline in imports combined with an uptick in exports was a positive indicator for the stock market.

Furthermore, the reduction of interest rates on bond yield also gave a signal that the interest rates are going to decline in coming time period. “At the moment, the discount rate has not decline, however, it is expected to drop significantly in the coming months. As interest rate lessens, people take the money out of banks and invest in stock market, which was the second signal,” he said.

Thirdly, money from the real estate sector shifted to stock market, after the documentation of real estate sector initiated. Lastly, dollars from lockers and banks are coming into the market, he added.

The 100-Index closed at the 17-month record level of 43,207 points during the trading week which begun on Monday and ended on Friday.