Following a day of profit-taking, bullish momentum returned to the Pakistan Stock Exchange (PSX) on Wednesday, with the benchmark KSE-100 Index gaining over 2,000 points in the early hours of trading. By 10:35 am, the index stood at 110,930.46.

Broad-based buying was noted in key sectors such as automobile manufacturing, cement, commercial banking, fertilizers, oil and gas exploration, oil marketing companies (OMCs), refineries, and power generation. Major stocks like HUBCO, PSO, SSGC, SHELL, ENGRO, MCB, MEBL, HBL, and DGKC were all trading positively.

This buying frenzy was fueled by improved economic indicators, particularly a drop in the inflation rate to 4.9% in November. This decline has heightened expectations for further policy rate cuts in the upcoming Monetary Policy Committee (MPC) meeting.

In a significant development, a high-level meeting was held on Tuesday to discuss the Advance-to-Deposit Ratio (ADR) in the banking sector. Participants examined how the ADR policy affects lending to productive sectors, tax revenue targets, and the overall banking environment. The Finance Act 2022 had introduced higher tax rates on investment income for banks with an ADR below 50%, aiming to boost commercial lending.

On Tuesday, the PSX experienced a volatile session, ultimately closing down due to selling pressure as investors took profits. The KSE-100 Index fell by 1,073.74 points or 0.98%, finishing at 108,896.65 points.

In global markets, Asian stock markets and the dollar paused on Wednesday ahead of an anticipated rate cut in Canada and a US inflation report expected to keep the Federal Reserve on track for further rate cuts.