The Pakistan Stock Exchange (PSX) started the week on a strong note, bolstered by improving economic indicators, solid corporate earnings, and heightened investor confidence. Currently, the market is exploring new heights, fueled by optimism due to stabilizing macroeconomic conditions and policy reforms designed to promote growth.
On Monday, the Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index soared, adding 1,860.12 points to a new high of 103,217.44 during intra-day trading. This represents a 1.84% increase from its previous close of 101,357.32, as the market builds on the positive momentum that propelled it past the 100,000-point threshold last week.
The ongoing upward trend, backed by favourable macroeconomic factors, continues. With inflation projected to drop to its lowest level since April 2018 at around 4.7% and market liquidity improving, all signs point to enhanced market performance. Additionally, the influx of $500 million from the Asian Development Bank (ADB) under the Climate Change and Disaster Resilience Enhancement Program has boosted Pakistan’s foreign exchange reserves, nearing the $12 billion mark, reducing economic uncertainty and fostering investor confidence.
Sectoral performance has played a crucial role in the index’s rise, with commercial banks contributing 1,675 points last week. The banking sector gained momentum by eliminating the Minimum Deposit Rate (MDR) requirement for corporate deposits, attracting significant investor interest.
Read: Pakistan Stock Exchange Breaks 100,000 Milestone Amid Market Resilience
Other sectors, including technology and communication, oil and gas exploration, and property, also saw strong gains last week, indicating broad market participation.
A shift from fixed income to equities due to consistently falling yields further energises the market. Analysts attribute the rally to the government’s decisive economic reforms and a brighter inflation outlook, anticipating inflation to fall between 5.6% and 6.5% by December. This prospect raises expectations for further interest rate cuts by the State Bank of Pakistan (SBP), boosting investor confidence.
Read: State Bank Removes MDR for Corporate Deposits
The SBP’s significant interest rate reduction earlier in November supports the favourable outlook, which created an optimal environment for equity markets. Despite foreign investors withdrawing $15.1 million, robust buying by local insurance companies has offset this outflow. The average daily traded value on the ready counter increased by 7.1% week-on-week, reaching Rs36.85 billion.
Following last week’s milestone, when the index first crossed the 100,000-point mark, the market surged by 3,559.09 points weekly, driven by local investor enthusiasm and institutional support. Despite occasional dips, the market has shown remarkable resilience amid political volatility and a conducive regulatory environment.
The outlook remains bright as the PSX continues to venture into uncharted territory. Analysts believe consistent policy support, stable external accounts, and reduced business costs will sustain the market’s upward trajectory.
