KSE-100 Index
The capital market started the week on a positive note, bolstered by a combination of improving economic indicators, strong corporate earnings, and heightened investor confidence.
This surge in market performance reflects growing optimism surrounding stabilizing macroeconomic conditions and ongoing policy reforms aimed at driving economic growth.
On Monday, the Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index soared, adding 1,860.12 points to reach a record high of 103,217.44 during intra-day trading.
This marked a significant 1.84% increase from the previous closing of 101,357.32, continuing the positive momentum that propelled the index past the 100,000-point mark last week.
Sana Tawfik, Head of Research at Arif Habib Limited, noted that the market’s growth is being supported by favorable macroeconomic factors, including inflation which is expected to reach its lowest level since April 2018, projected to be around 4.7%. She also highlighted the improved market liquidity, which has been a driving force behind the market’s recent performance.
A key factor contributing to investor optimism was the $500 million received from the Asian Development Bank (ADB) as part of the Climate Change and Disaster Resilience Enhancement Program.
This financial injection bolstered Pakistan’s foreign exchange reserves, pushing them close to the $12 billion mark. Analysts view this as a crucial step in mitigating economic uncertainty and boosting investor confidence.
The commercial banking sector played a significant role in driving the market’s rally, contributing 1,675 points to the index last week. The banking sector received a further boost with the removal of the Minimum Deposit Rate (MDR) requirement for corporate deposits, fueling investor interest.
Other sectors, such as technology and communications, oil and gas exploration, and property, also saw strong gains, reflecting broad-based market participation.
Market analysts attribute the rally to the government’s ongoing economic reforms and a favorable inflation outlook. With inflation projected to drop to 5.6%-6.5% by December, expectations have risen for a potential interest rate cut by the State Bank of Pakistan (SBP), further encouraging investment.
The combination of lower inflation expectations and the SBP’s earlier interest rate cuts has created an attractive environment for equity markets.
The average daily traded value on the ready counter rose by 7.1% week-on-week, reaching Rs36.85 billion. Despite foreign investors withdrawing $15.1 million, local insurance companies provided strong buying support.
As the PSX continues to hit new highs, market analysts remain optimistic about its trajectory. They believe that consistent policy support, stabilizing external accounts, and reduced business costs will sustain the market’s upward momentum in the coming months.
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