Friday’s session at the Pakistan Stock Exchange (PSX) delivered both excitement and caution as the KSE-100 Index reached an unprecedented intraday high of 115,172.44 points, marking a gain of 0.87%. However, the rally was tempered by profit-taking, with the index later retreating to 112,946.48, reflecting a decline of 1.08%.
“Market is consolidating at current levels with profit-taking observed after recent gains,” commented Samiullah Tariq, Head of Research at Pak-Kuwait Investment Company, describing the session as a natural cooling-off after consecutive record-setting days.
The opening surge underscores robust macroeconomic indicators, including declining inflation, an anticipated monetary easing, and improved economic activity. Investors were optimistic, driven by reduced Treasury Bill (T-bill) yields and significant liquidity inflows, signaling a promising outlook for Pakistan’s economy.
Foreign reserves remain resilient at $16.6 billion as of December 6, 2024. While a slight dip was noted, reserves held by the State Bank of Pakistan (SBP) climbed to $12.051 billion, the highest since March 2022. Additionally, a narrowed Current Account Deficit (CAD) of $217 million in the first two months of FY2025, along with an August surplus, bolsters confidence in the country’s economic stability.
Exports and remittances are projected to reach $33 billion and $33.5 billion, respectively, by FY2025, driven by government incentives and easing global inflation. Positive momentum is further fueled by economic reforms and rising car sales, which soared by 62% year-on-year in November.
Expectations of a 200-basis-point policy rate cut during the December 16 Monetary Policy Committee meeting are high, supported by inflation hitting a six-year low of 4.9% in November. The government’s recent reduction in NSS profit rates is also expected to drive funds into equities, enhancing market liquidity.
International support has played a pivotal role, with Saudi Arabia extending a $3 billion deposit and signing trade deals worth $560 million, strengthening Pakistan’s reserves and boosting investor confidence. Additionally, the Asian Development Bank’s approval of $530 million in loans aims to modernize Pakistan’s power distribution and expand social safety nets.
Thursday’s rally, which saw the KSE-100 Index climb by 3.04% to close at 114,180.50, highlighted unprecedented optimism, marking the third-largest single-day gain in PSX history.
With stable macroeconomic fundamentals, declining inflation, and anticipated monetary easing, analysts remain confident about the PSX’s long-term growth, predicting further upward momentum as investor sentiment remains buoyant.
