The capital market started the week on a positive note, driven by a combination of improving economic indicators, strong corporate earnings and solid investor confidence.
The market is now in an all-time high, reflecting optimism surrounding stabilizing macroeconomic conditions and policy reforms aimed at fostering growth.
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 index climbed further on Monday, adding 1,460.43 points to hit a new high of 102,817.75 during intraday trading.
This represents an increase of 1.44% from the previous close of 101,357.32, as the market continues to capitalize on the positive momentum that saw it cross the 100,000 point mark last week.
“The positive momentum observed since last week and even before continues, supported by improving macroeconomic factors,” said Sana Tawfik, head of research at Arif Habib Limited.
“With inflation expected to reach its lowest level since April 2018, we expect it to be around 4.7%, and improving market liquidity, all factors are driving market performance,” she added.
One of the developments that boosted market sentiment was the receipt of $500 million from the Asian Development Bank (ADB) under the Climate Change and Disaster Resilience Building Program.
This influx has strengthened Pakistan’s foreign exchange reserves, pushing them close to the $12 billion mark. Analysts see this as a key factor in reducing economic uncertainty and boosting investor optimism.
Sectoral performance was key to the index’s rise, with commercial banks leading the way with a contribution of 1,675 points last week.
The removal of the minimum deposit rate (MDR) requirement for corporate deposits further boosted the banking sector, which continued to attract substantial investor interest.
The technology and communications, oil and gas exploration and real estate sectors also posted robust gains last week, reflecting broader market participation.
“The steady decline in yields and the shift of investors from fixed income to equities is driving the market,” noted Samiullah Tariq, head of research at Pak-Kuwait Investment Company.
Market analysts attribute the recovery to the government’s decisive economic reforms and a more positive inflation outlook, with projections suggesting inflation could fall to between 5.6% and 6.5% by December.
The development has raised expectations that it could lead to a further reduction in interest rates by the State Bank of Pakistan (SBP), thereby boosting investor confidence.
Falling inflation expectations, coupled with a significant cut in interest rates by the SBP in early November, has created a favorable environment for stock markets.
The average daily transaction value in the loan market rose 7.1 percent week-on-week to Rs 36.85 billion, while foreign investors withdrew $15.1 million, offset by strong purchases from local insurance companies.
Today’s rise follows the index surpassing the unprecedented 100,000 point mark last week, closing Friday at its then-high of 101,357.32.
The past week saw the market jump 3,559.09 points on a weekly basis, driven by a combination of local investor enthusiasm and institutional support.
Despite declines, the market recovered strongly, demonstrating resilience amid political volatility and a favorable regulatory environment.
As PSX continues to venture into uncharted territory, the outlook remains optimistic.
Analysts believe that consistent policy support, stabilized external accounts and reduced costs of doing business will support the market’s upward trajectory.
This is a developing story and is being updated with more details.