Stocks on Monday experienced significant volatility, swinging between sharp dips and rebounds, as political uncertainty triggered by Pakistan Tehreek-e-Insaf’s (PTI) “do-or-die” march weighed on market sentiment. However, the Pakistan Stock Exchange (PSX) found stability, closing in the green zone, supported by strong economic fundamentals.
The benchmark KSE-100 Index surged by 281.55 points, or 0.29%, to end at 98,079.78 points. At its peak, the index climbed 1,519.24 points (1.55%) to hit an intraday high of 99,317.47 points, following an initial drop of over 600 points after the opening bell.
Muhammad Saad Ali, Director of Research at Intermarket Securities, explained that early trading was impacted by political concerns, noting that profit-taking had occurred after the index neared 100,000 points, and that the futures rollover week typically triggers selling pressure.
Despite the early dip, the market rebounded strongly, driven by positive economic indicators and improving macroeconomic conditions. Analysts pointed to several key factors contributing to the optimism, including a surplus in the current account, a steady decline in fixed-income yields, and a recent positive review from the International Monetary Fund (IMF).
Tahir Abbas, Head of Research & Investment Strategy at Arif Habib Limited, noted that the market’s valuation was particularly attractive, especially as declining interest rates rendered fixed-income returns less appealing. He emphasized that as long as macroeconomic stability persisted, the market was poised to maintain its upward momentum.
The State Bank of Pakistan (SBP) also contributed to market optimism by raising Rs350 billion through Pakistan Investment Bonds (PIBs), exceeding the target of Rs300 billion, with yields falling to their lowest levels since March 2022. The improvement in the country’s external account was another boost, with a current account surplus of $349 million in October, marking the third consecutive monthly surplus.
Meanwhile, foreign exchange reserves hit a two-year high, and Foreign Direct Investment (FDI) grew by 32% year-on-year to $904.3 million during the July-October period, signaling confidence in Pakistan’s economic recovery. As reserves are expected to surpass $11 billion soon, local mutual funds have shifted investments from fixed-income assets to equities, contributing to a 20% surge in the KSE-100 Index since September.
Despite the political protests and government crackdowns, the PSX has continued its upward trajectory, supported by favorable economic indicators and strong liquidity. The PTI-led protests have created disruption, but the market has remained resilient, with analysts expecting the KSE-100 to hit historic highs in the near future.
