The Pakistan Stock Exchange’s benchmark index saw a bullish trend on Monday, seeing a positive change of 4.03 per cent, as the country saw ease in political tensions with the formation of negotiation committees by the government and the PTI.

According to the PSX website, the KSE-100 index gained 4,411.27 points to close at 113,924.42 points as compared to 109,513.15 points on the last trading day.

A total of 857,834,976 shares were traded during the day as compared to 754,917,969 shares the previous trading day, whereas the price of shares stood at Rs50.549 billion against Rs39.424 billion on the last trading day.

As many as 463 companies transacted their shares in the stock market, 361 of them recorded gains and 62 sustained losses, whereas the share price of 40 companies remained unchanged.

‘Investor optimism’

After a decline of approximately 9,000 points last week, the market rebounded on Friday, reflecting renewed investor optimism as many are finding value at current levels.

Ahfaz Mustafa, the Ismail Iqbal Securities CEO, attributed the market’s rise to the political calm, as the PTI and the government held a dialogue in Islamabad.

Mustafa noted that the market’s early trade surge of around 2,000 points helped recoup losses from last week’s correction.

He highlighted the influx of investments from mutual funds and high-net-worth individuals, as well as stable yields on government securities, as driving factors.

Ahsan Mehanti from Arif Habib stated that the market’s growth was broad-based, influenced by falling lending rates following a decrease in government bond yields. Positive economic indicators, including rising exports, remittances, and foreign reserves, also contributed to the PSX’s upward momentum.

Additional factors

Additional factors supporting the market include the State Bank of Pakistan’s decision to lower the policy rate to 13%, a 200 basis point reduction. The country reported its highest current account surplus in a decade at $729 million for November 2024, a significant improvement from a $148 million deficit in November 2023.

Furthermore, while the large-scale manufacturing sector saw a slight year-on-year increase of 0.02% in November, it remained negative over the first four months of FY25. Pakistan’s power generation rose by 6% year-on-year, totaling 8,032 GWh in November. The government raised Rs382 billion through Pakistan Investment Bonds (PIBs), with yields decreasing by up to 55 basis points.

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In November, profit repatriation reached $322 million, bringing the total for the first five months of FY25 to $1.13 billion, a 112% increase year-on-year. Additionally, the finance minister proposed stringent taxes and regulations for non-filers and signed a $330 million loan agreement with the Asian Development Bank to enhance social protection.

Foreign direct investment (FDI) for November amounted to $219 million, marking a 65% month-on-month rise and a 27% year-on-year increase. The Oil & Gas Regulatory Authority (OGRA) has also proposed a 25.7% increase in gas rates to generate approximately Rs847.33 billion this fiscal year.

According to Topline Securities, Pakistan’s stock market outperformed bonds, gold, and the US dollar in 2024, largely due to economic reforms stemming from the IMF program and reduced interest rates that redirected local liquidity into equities.