The stock market rebounded on Friday, recovering from the previous day’s historic losses, as investors took advantage of attractive valuations and positive economic indicators.
Renewed optimism about market stability has led to a sharp increase in purchasing activity, reflecting confidence in the market’s potential for sustained growth.
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 index climbed 1,568.62 points, or 1.48 percent, to an intraday high of 107,843.59, as investors returned to the room markets. The strong rally came after a week marked by intense volatility and profit-taking that led to sharp declines.
“The market is recovering from profit-taking as valuations have become attractive,” said Samiullah Tariq, head of research at Pak-Kuwait Investment Company, attributing the renewed interest to improving sentiment and points attractive entry points for investors.
Recent data from the State Bank of Pakistan (SBP) revealed a 112% year-on-year increase in profit and dividend repatriations by multinational corporations, reaching $1.128 billion in the first five months of the year. fiscal year 2025. November alone accounted for $321.6 million, an increase of 586% year-over-year, although it was a decrease of 22.3% month-on-month due to clearing of pending payments and easing restrictions on dollar outflows.
The government has introduced the Taxation (Amendment) Bill, 2024, proposing strict measures against non-filers. The legislation prohibits non-filers from purchasing vehicles over 800 cc, real estate and stocks beyond specific limits, while restricting their ability to open bank accounts or execute large financial transactions.
The Federal Board of Revenue (FBR) has been given the power to freeze accounts and properties in case of non-compliance. These measures have raised concerns about reduced liquidity and expenses, contributing to investor caution.
Despite recent market fluctuations, Pakistan’s macroeconomic fundamentals continue to strengthen. The country recorded a current account surplus of $729 million in November, the largest since February 2015. For the first five months of fiscal 2025, the surplus stood at $944 million, up from a deficit of $1.67 billion for the same period last year.
This improvement is explained by a reduction in trade and services deficits and a drop in interest and dividend repatriations.
Foreign direct investment (FDI) also increased 31% year-on-year to $1.124 billion, with significant flows from China, Hong Kong and the United Kingdom. Meanwhile, remittances rose 29% year-on-year in November to $2.9 billion, bringing the five-month total to $14.8 billion.
The 200 basis point cut in the policy rate to 13% reflects efforts to boost economic growth amid slowing inflation, which fell to 4.9%, its lowest level since April 2018.
Friday’s session followed Thursday’s historic sell-off, during which the KSE-100 index fell 4,795.32 points (-4.32%) to close at 106,274.97, marking the sharpest drop over one day in the history of the PSX.
The sell-off was driven by year-end redemptions from local mutual funds and institutional profit-taking, with heavyweights such as MARI (-10%), HUBC, UBL, OGDC and ENGRO collectively contributing over 1,500 points down. according to Topline Securities.
Despite the negative sentiment, trading volumes remained robust, with 1,155 million shares traded and turnover of Rs 56.6 billion.