On Monday, the stock market experienced significant volatility, swinging in both directions due to political uncertainty surrounding Pakistan Tehreek-e-Insaf’s (PTI) “do-or-die” protest march. Despite the turbulence, strong economic fundamentals helped keep the market in positive territory, with the Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index closing up by 281.55 points, or 0.29%, at 98,079.78 points.
The index initially dropped over 600 points following the opening bell but quickly recovered, surging by 1,519.24 points (1.55%) to hit an intraday high of 99,317.47 points. Muhammad Saad Ali, Director of Research at Intermarket Securities, attributed the early dip to political factors and profit-taking, particularly after the index had nearly hit 100,000 points last week.
However, investor sentiment rebounded as the market was supported by strong economic indicators. Key factors contributing to the optimism included improving macroeconomic conditions, declining lending rates, and positive news such as the current account surplus of $349 million for October 2024. Analysts also pointed to the market’s attractive valuations in light of falling fixed-income yields.
The State Bank of Pakistan’s (SBP) recent actions, including raising Rs350 billion in Pakistan Investment Bonds (PIBs) with yields falling to their lowest since March 2022, also bolstered confidence. Additionally, Foreign Direct Investment (FDI) grew by 32% year-on-year during the first four months of FY25, further strengthening the outlook.
Despite heightened political tensions and ongoing PTI protests demanding political reforms, the market’s resilience reflects growing investor confidence in Pakistan’s economic recovery. With foreign exchange reserves rising and the current account surplus continuing, equities remain an appealing asset class, with the KSE-100 Index continuing its upward trajectory.
