Monitoring Desk
The Pakistan Stock Exchange (PSX) continued its record-breaking rally on Thursday as the benchmark KSE-100 index surged by 1,215 points in intraday trading, surpassing the 119,000 barrier for the first time.
The index climbed to 119,189.48 points at 9:43 am, marking a 1.03% increase from the previous close of 117,974.02. Analysts attributed the bullish momentum to growing optimism surrounding Pakistan’s negotiations with the International Monetary Fund (IMF) and expectations of economic stability.
Key Drivers of the Rally
Mohammed Sohail, CEO of Topline Securities, highlighted that local fund buying, driven by expectations of an imminent staff-level agreement (SLA) with the IMF, was fueling the market’s momentum.
Yousuf M. Farooq, Director Research at Chase Securities, noted that improved clarity on the IMF program, expectations of lower electricity prices, and a recovery in sectoral demand were key factors driving investor confidence. “The market had paused ahead of the IMF review but has now surpassed its previous high,” he said.
Farooq also emphasized that despite short-term volatility, investors should maintain a long-term perspective, citing the index’s historical growth from 1,500 points in 2000 to 119,000 today. He projected a long-term return of 16-18%, with the potential for the index to double every 4-4.5 years.
Awais Ashraf, Director Research at AKD Securities, echoed similar sentiments, stating that investor optimism was being fueled by improving macroeconomic indicators and expected positive developments in the mining and automotive sectors.
Impact of Circular Debt Resolution
Analysts also pointed to the government’s recent agreement with banks to extend Rs1.25 trillion in financing at a favorable interest rate to address circular debt in the power sector. This move is seen as a critical step in resolving Pakistan’s longstanding energy crisis, which has been a key sticking point in IMF negotiations.
The IMF has reportedly permitted Pakistan to borrow Rs1.25 trillion ($4.5 billion) from domestic banks to manage the country’s Rs2.4 trillion circular debt without adding to public debt.
Investor sentiment was further boosted as the IMF shared a draft of the Memorandum of Economic and Financial Policies (MEFP) with Pakistani authorities, signaling progress toward securing a staff-level agreement under the $7 billion Extended Fund Facility (EFF).
With growing confidence in economic stability and expected reforms, market analysts anticipate that the bullish momentum at the PSX could sustain in the near term.
