The Pakistan Stock Exchange (PSX) opened the week on a strong note, reflecting growing confidence in the economy. A mix of better economic indicators, strong corporate results, and investor optimism fueled the surge.
On Monday, the KSE-100 Index soared by 1,460.43 points during intra-day trading, hitting a record high of 102,817.75. This represented a 1.44% rise from the previous close of 101,357.32. The stock market has been building on the momentum since surpassing the 100,000-point milestone last week.
According to Sana Tawfik, Head of Research at Arif Habib Limited, the market’s strength comes from improving macroeconomic factors. “With inflation expected to drop to 4.7%, the lowest since April 2018, and better market liquidity, all factors are boosting performance,” she said.
A significant development supporting market confidence was the inflow of $500 million from the Asian Development Bank (ADB). The funds, part of a climate change and disaster resilience program, increased Pakistan’s foreign exchange reserves to nearly $12 billion. Analysts see this as a key factor in reducing economic risks and improving investor sentiment.
Sectoral growth has been a major driver of the index’s rise. Commercial banks led the charge last week, contributing 1,675 points. The removal of the Minimum Deposit Rate (MDR) requirement for corporate deposits further strengthened the banking sector. This policy shift attracted more investors to the sector.
Technology, oil and gas, and real estate sectors also posted strong gains last week. This reflects wider market participation and growing investor interest across industries. Samiullah Tariq, Head of Research at Pak-Kuwait Investment Company, highlighted this shift. “Investors are moving from fixed income to equities due to falling yields. This is giving a big boost to the market,” he said.
Government policies and an improved inflation outlook are also fueling the rally. Analysts predict inflation could drop to 5.6%-6.5% by December. This has raised hopes of another interest rate cut by the State Bank of Pakistan (SBP), which could further enhance market performance.
The SBP’s recent interest rate cut in November has already improved conditions for equities. Lower inflation and reduced borrowing costs have created a favorable environment for stock market growth.
Trading activity has also increased. The average daily traded value rose by 7.1% week-on-week to Rs36.85 billion. Foreign investors withdrew $15.1 million, but strong local insurance company purchases offset this outflow.
The PSX has shown resilience despite political uncertainty. The market gained 3,559.09 points last week due to local and institutional investor support. Even after temporary dips, the market bounced back strongly.
The outlook for the PSX remains positive. Analysts believe consistent policy support, a stabilized economy, and reduced business costs will sustain the upward trend. As the market continues to climb into uncharted territory, optimism among investors is growing.
