Shares at the Pakistan Stock Exchange (PSX) experienced a significant boost on Monday, with the benchmark KSE-100 index climbing over 700 points in intraday trading. By 11:15 AM, the index had surged 704.08 points, or 0.9 per cent, to reach 79,149.04 points, up from the previous close of 78,444.96 points. This rally was fuelled by investor optimism over anticipated lower inflation figures and the potential for an International Monetary Fund (IMF) agreement.
Investor sentiment and market drivers
Mohammed Sohail, Chief Executive of Topline Securities, noted that investors were “building new positions amid expectations of lower CPI (Consumer Price Index) reading.” The anticipation of reduced inflation rates has contributed to positive market sentiment, encouraging investment in equities.
Further bolstering the market’s performance was the expectation of an imminent IMF staff-level agreement (SLA). According to Sohail, the passage of the tax-laden budget has paved the way for this agreement, reinforcing investor confidence.
Financial sector insights
Amreen Soorani, Head of Research at JS Global, observed that “bullish sentiment prevails at PSX as the Finance Bill’s approval fuels optimism for an IMF deal.” She highlighted Pakistan’s attractive market valuations, noting that the market is trading at just 4x multiples despite a nearly 90pc gain over the past year, making it enticing for investors compared to global peers.
Raza Jafri, Chief Executive of EFG Hermes Pakistan, echoed these sentiments, pointing out that the passage of the FY25 budget represents a significant step towards securing an IMF programme. “The inflation print is also due, and rate cuts are expected to continue in the next monetary policy. These factors continue to pull local flows into equities,” Jafri added.
Market stability and future outlook
Yousuf M. Farooq, Director of Research at Chase Securities, attributed the market’s upward trajectory to the budget’s approval, which he believes will facilitate Pakistan’s entry into the next IMF programme. “A new IMF programme would lead to stability on the external front and a check on Pakistan’s fiscal account,” he elaborated. Farooq also highlighted that lower inflation expectations should lead to a gradual decline in interest rates and a subsequent upward re-rating of the market.
Awais Ashraf, Director of Research at AKD Securities, shared similar views. He stated, “Approval of the budget in line with the IMF requirements has helped build investor confidence, as the odds of getting a new bailout package have improved.”
