The Pakistan Stock Exchange (PSX) experienced a significant surge on Friday, with the KSE-100 index gaining over 1,000 points in intraday trading, briefly touching a record high of 77,000. This followed substantial gains witnessed the previous day, marking one of the largest single-day increases in recent trading history.
By 11:04am, the KSE-100 index had climbed 1,097.12 points, or 1.44%, reaching 77,305.28 from its previous close of 76,208.16, as reported by the PSX data portal. By the end of the trading day, the index closed at 76,706.77, up by 498.61 points or 0.65% from the previous session’s close. Market analysts attributed this bullish momentum to several factors. Raza Jafri, CEO of EFG Hermes Pakistan, highlighted the positive sentiment post-budget, fueled by improved liquidity and a shift from fixed income to equities amidst monetary easing measures.
Yousuf M Farooq, Director of Research at Chase Securities, pointed to reduced uncertainty and increased mutual fund investments in equities, driven by expectations of declining interest rates which are expected to boost stock valuations . Awais Ashraf, Director of Research at AKD Securities, credited the market rally to the government’s budget aligning with International Monetary Fund (IMF) recommendations and maintaining the status quo on capital gains tax, which reassured investors and supported macroeconomic stability.
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The budget’s implementation, including an unchanged capital gains tax and adjustments in dividend income taxation, received mixed reactions from different sectors. While it was generally seen as neutral for the market overall, specific sectors like textiles expressed concerns over changes in tax regimes impacting profitability. Amreen Soorani, Head of Research at JS Global Capital, noted that investors welcomed the tax parity between the stock exchange and other asset classes, reflecting broader market confidence.
Looking ahead, the government aims to significantly increase tax revenue in the upcoming fiscal year, targeting 13 trillion rupees ($47 billion), nearly 40% higher than the current fiscal year. This ambitious goal is part of efforts to stabilize the economy amid slow growth, with Pakistan also negotiating a substantial loan from the IMF to manage fiscal challenges and avoid default.
Overall, the PSX’s recent performance underscores investor optimism driven by fiscal policy continuity, favorable market conditions, and strategic economic reforms aimed at sustaining growth and stability.
