Bulls led a strong rally at the Pakistan Stock Exchange (PSX) on Wednesday, driving shares up by over 900 points due to improved economic indicators.
The benchmark KSE-100 index rose by 1,031.13 points, or 1.3%, to 80,522.26 points by 3:20 p.m. It closed at 80,461.33 points, up 970.20 points or 1.22%, from the previous day.
Awais Ashraf, Director of Research at AKD Securities, attributed the surge to expectations of the IMF Executive Board approving a US$7 billion Extended Fund Facility and improvements in key economic fundamentals. The IMF is set to discuss Pakistan’s loan facility on September 25.
Read: Pakistan Set to Secure Final IMF Bailout Package on September 25 : Finance Minister
Prime Minister Shehbaz Sharif’s government aimed to secure an IMF deal in August after a 37-month program was approved in July. To meet IMF demands, Pakistan increased its tax revenue target by 40% and raised energy prices.
Ashraf also pointed out that falling oil prices could keep the State Bank of Pakistan (SBP) on aggressive monetary easing, maintaining a positive real interest rate of 7.9%.
Read: Fuel Prices: Petrol Drops Rs10, Diesel by Rs13
On September 12, the SBP cut its key policy rate by 200 basis points to 17.5% from 19.5%, responding to widespread calls for a substantial rate reduction.
Read: State Bank of Pakistan Cuts Key Policy Rate by 200bps
Shahab Farooq, Director of Research at Next Capital Limited, recognized FTSE rebalancing as a market concern. However, he mentioned positive market reactions to news of the upcoming IMF board meeting. He also highlighted a $2 billion loan assurance from the Asian Development Bank and expectations that September inflation will stay below 8%, contributing to optimistic market sentiments.
Farooq expects a positive market outlook, with foreign selling related to rebalancing expected to conclude this week.
