The Pakistan Stock Exchange (PSX) experienced a volatile session on Tuesday, as the benchmark KSE-100 Index briefly crossed the historic 117,000-point mark during early trading before succumbing to heavy profit-taking later in the day.
The session began on a strong note, fueled by the State Bank of Pakistan’s (SBP) recent policy rate cut and improving macroeconomic indicators. The KSE-100 Index surged to an intraday high of 117,039.17, reflecting renewed investor confidence. However, selling pressure in the afternoon session erased earlier gains, dragging the index to an intraday low of 113,688.54. By the close, the benchmark index had lost 1,308.73 points, or 1.13%, to settle at 114,860.68.
“Some profit-taking is being witnessed today as the market has increased considerably,” said Samiullah Tariq, Head of Research at Pak-Kuwait Investment Company, commenting on investor behavior after the recent surge.
The SBP’s decision to slash the policy rate by 200 basis points to 13% has sparked interest in equities, marking its fifth consecutive rate cut. The central bank’s accommodative stance is aimed at spurring economic growth, following a sharp decline in inflation to 4.9% in November — the lowest level since April 2018.
SBP Governor Jameel Ahmed, speaking to Geo News, acknowledged that inflation could temporarily rise in the coming months due to base effects and pipeline factors. However, he expressed confidence that inflation would stabilize within the 5-7% range by June 2025. Ahmed also assured investors that Pakistan’s foreign reserves — standing at $16.6 billion as of December 6, 2024 — are sufficient to meet the country’s external debt obligations.
Macroeconomic stability continues to bolster investor sentiment. Remittance inflows surged by 29% year-on-year to $2.9 billion in November, significantly improving the Current Account Deficit (CAD), which fell 79% year-on-year to $217 million in the first two months of FY2025.
Exports are projected to rise to $33 billion by the end of FY2025, while remittances are expected to reach $33.5 billion, driven by easing global inflation and government incentives promoting formal remittance channels.
The banking sector also showed resilience, with the Advance-to-Deposit Ratio (ADR) improving to 47.8% in November, up from 44.3% in October. Meanwhile, the government’s successful auction of Treasury Bills (T-bills) raised Rs1.256 trillion last week, with yields on three-month papers dropping by 100 basis points to 11.99%.
Signs of economic recovery are also evident in consumer activity. Passenger car sales recorded a 52% year-on-year increase in November, reflecting a revival in consumer confidence.
The KSE-100 Index’s rally earlier this week was driven by aggressive value-hunting, pushing the index to a record close of 116,169.41 on Monday. Analysts remain optimistic that the SBP’s rate cuts, coupled with improving economic indicators and rising liquidity inflows, will sustain the stock market’s upward momentum in the coming weeks.
