PTBP Web Desk
The Pakistan Stock Exchange (PSX) continued its bullish run on Wednesday as the benchmark KSE-100 index surged by more than 600 points in intraday trading.
This rally comes on the back of strong investor sentiment driven by the anticipation of the International Monetary Fund (IMF) Executive Board’s approval of the $7 billion Extended Fund Facility for Pakistan and other positive economic indicators.
At 11:33 am, the KSE-100 index climbed 628.14 points, or 0.79%, reaching 80,119.27 points, up from the previous close of 79,491.13 points. The market’s upward trajectory reflects growing investor optimism about the country’s economic outlook. Awais Ashraf, Director of Research at AKD Securities, highlighted that the bullish trend is largely influenced by expectations surrounding the IMF’s decision. The Fund’s Executive Board is set to meet on September 25 to discuss the loan facility for Pakistan, a development that has been eagerly anticipated by the market.
The government, led by Prime Minister Shehbaz Sharif, had initially aimed to secure a deal with the IMF in August. This followed the lender’s approval of a 37-month Extended Fund Facility (EFF) program in July. To meet the IMF’s stringent requirements, Pakistan raised its tax revenue target by a record 40% and increased energy prices, demonstrating its commitment to the reform agenda.
Another key factor driving the market rally is the recent decline in global oil prices. This trend has raised expectations that the State Bank of Pakistan (SBP) will maintain its aggressive monetary easing stance. Ashraf noted that the SBP currently maintains a positive real interest rate of 7.9%, which could support further market growth. The central bank had recently reduced its key policy rate by 200 basis points, bringing it down to 17.5% from 19.5%, amid growing calls for a major rate cut to stimulate economic activity.
The contribution of individual companies to the market’s performance is also noteworthy. Mari Petroleum Company Limited, for example, contributed 321 points to the index’s 593 positive points. This substantial contribution came after the company’s second trading session following a 900% bonus adjustment, underscoring the impact that corporate actions can have on overall market performance.
While the market outlook remains positive, there are external factors that investors are keeping an eye on. Shahab Farooq, Director of Research at Next Capital Limited, mentioned that the FTSE rebalancing remains a concern for the market. However, the anticipation of the IMF’s Executive Board meeting has helped buoy market sentiment, offsetting some of the apprehensions associated with rebalancing-related foreign selling.
Additionally, assurance of a $2 billion loan from the Asian Development Bank (ADB) and expectations that inflationary pressure will fall below 8% for September have further fueled positive sentiments among investors. These developments indicate that the market’s current bullish trend is supported by a combination of internal economic policies and external financial support, contributing to an optimistic outlook for the PSX.
The market’s positive trajectory is expected to continue, with rebalancing-related foreign selling anticipated to end within the week. Investors are closely watching the IMF’s upcoming decision and the government’s continued efforts to stabilize the economy. The reduction in oil prices and the SBP’s monetary easing are also playing crucial roles in shaping market expectations.
Furthermore, the government’s commitment to economic reforms and securing international financial assistance, such as the potential $7 billion IMF loan and the $2 billion from the ADB, is providing a foundation for sustained investor confidence. If these developments materialize
