Pakistan Stock Exchange Hits 110,000 Mark as Bullish Momentum Continues for Ninth Session

The Pakistan Stock Exchange (PSX) maintained its bullish trend on Monday, marking the ninth consecutive session of positive gains as shares surged over 1,000 points. This latest rally pushed the market to cross the 110,000 milestone, showcasing strong investor optimism.

The benchmark KSE-100 index rose by 1,044.16 points, or 0.96%, to reach 110,098.11 points at 11:24 am, up from its previous close of 109,053.95. The index extended its gains slightly later in the day, climbing to 110,217.92 points by 2:50 pm.

Over the past two weeks, the PSX has recorded multiple single-day highs, fueled by extensive mutual fund activity. Notably, the equity market saw a record weekly point gain of 7,697 points in the outgoing week, largely driven by mutual funds’ aggressive buying.

Yousuf M. Farooq, research director at Chase Securities, highlighted the recent shift in market dynamics as a key driver of this upward trend. Farooq attributed the rally to interest rates returning to more stable levels after reaching historic highs earlier this year.

“Interest rates, which were at an all-time high, have now returned to more normal levels. This shift has rapidly brought stock valuations to more reasonable levels,” Farooq said. He added that market rates, which stood at over 20.5% in June, are now closer to 12%.

Furthermore, expectations of an interest rate cut during the upcoming Monetary Policy Committee meeting on December 16 have bolstered investor confidence. According to Farooq, the substantial decline in rates has prompted a major shift from fixed-income investments into equities, with mutual funds contributing unprecedented investment levels.

“This significant decline has driven a substantial shift from fixed income to equities, with mutual funds — now much larger than in the last cycle — injecting record sums into the equity market at an unprecedented pace,” Farooq explained.

The analyst also predicted that the rally would lead to market returns normalizing to historical long-term averages, reflecting a return to market stability and investor confidence.

However, a note of caution emerged as banks faced pressure at the market open. Media reports indicated that the government is exploring additional taxation measures targeting banks, which are already major contributors to the tax base.

Investor optimism is further underpinned by improving macroeconomic data. Inflation, for instance, has dropped to 4.9%, its lowest level since 2017, further supporting investor sentiment.

Additionally, a $3 billion financial boost from Saudi Arabia has added further momentum to the market. The country extended its deposit with Pakistan for another year to support its economic stability. Further reinforcing investor confidence, Pakistan has formalized contracts worth $560 million by converting seven out of the 37 MoUs signed with Saudi Arabia.

This combination of supportive monetary policy, stabilizing inflation, and foreign financial support has fueled the recent rally, reflecting growing investor confidence in Pakistan’s economic recovery.