Stocks rally on hopes of third rate cut next month

Equity investors remained in the bullish mind of the frame on Thursday, indulging in cherry-picking, as slashing of yields on treasury bills (T-bills) and falling Kibor aided the benchmark index to extend its overnight rally. Ahsan Mehanti of Arif Habib Corporation said stocks maintained a bullish tone after the government slashed returns on various tenors of T-bills by up to 148bps, boosting expectations of a third straight cut in the State Bank of Pakistan’s policy rate next month. He said banking and fertiliser scrips outperformed on reports of surging fertiliser prices and banking deposits. The finance minister’s assurance of being fully engaged with IMF and moving in the right direction for securing the executive board’s approval for a $7bn Extended Fund Facility next month boosted investor sentiments.