Investor optimism returned to the capital market on Wednesday, as expectations of an interest rate cut and fresh corporate developments helped lift sentiment ahead of the State Bank’s monetary policy verdict.

The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index climbed to an intraday high of 139,018.88, gaining 1,054.07 points, or 0.76%, and recorded a low of 138,120.03 for the session, reflecting an uptick of 155.22 points, or 0.11%, compared to the previous close of 137,964.81.

“Stocks recovered sharply higher as investors eye SBP policy easing amid subdued inflation," said Ahsan Mehanti, Managing Director and CEO of Arif Habib Commodities.

"Strong financial results, surging global equities, and rupee stability played a catalyst role in bullish activity at PSX,” he added.

The Monetary Policy Committee (MPC) is meeting today (July 30) to determine the benchmark interest rate. A consensus among analysts suggests the SBP is likely to announce a rate cut, with market focus turning to the size of the expected reduction as inflation continues to moderate.

CEO of Topline Securities Mohammed Sohail explained the reasons for the bullish sentiment as “rate cut expectations and system acquisition announcement”.

One of the major corporate developments boosting sentiment was the approval by Systems Limited (SYS) — Pakistan’s largest listed software firm — to acquire British American Tobacco SAA Services (Pvt) Ltd from BAT International (UK). The acquisition targets a company providing IT-enabled shared services in marketing, human resources, finance, and procurement functions.

In a broader global context, the International Monetary Fund (IMF) raised its economic growth forecast for emerging and developing economies to 4.1% in 2025, up from 3.7%. The upward revision is attributed to policy frontloading and improved expectations for China’s economic outlook. For 2026, the IMF now expects growth of 4%, slightly higher than the previous 3.9% projection.

On Tuesday, the KSE-100 Index had dropped by 1,415.24 points, or 1.02%, to settle at 137,964.82 points from the previous close of 139,380.06. The index hit a high of 140,331.02 and a low of 137,636.37 during the session, as profit-taking and pre-policy uncertainty drove sentiment.