The stock market made history again on Tuesday by surpassing the 111,000-point milestone for the first time.
This record-breaking rally was driven by robust macroeconomic indicators and anticipation of further rate cut, showcasing heightened confidence in Pakistan’s economic recovery and a positive investment outlook.
The KSE-100 Index surged 1,044.35 points, or 0.95%, to reach an intraday high of 111,014.73, building on Monday’s close of 109,970.38, underscoring continued investor optimism as the market extends its unprecedented streak of gains.
“Anticipation of a rate cut, lower inflation numbers, improved liquidity—particularly buying from funds—and low bond yields making equities an attractive asset class are the key drivers,” said Sana Tawfik, Head of Research at Arif Habib Limited.
The rally highlights improving sentiment around Pakistan’s economic outlook, driven by declining inflation, stronger foreign reserves, and increased economic activity. Investors remain encouraged by ongoing reforms and the potential for further monetary easing, setting the stage for sustained market momentum in the days ahead.
Remittances reached $14.8 billion during the first five months of FY2025, marking a 33.6% year-on-year increase, according to the State Bank of Pakistan (SBP). November alone saw inflows of $2.9 billion, up 29.1% from the same month last year, though slightly lower than October’s figure.
Key drivers behind this growth include a stable rupee, government incentives for banks and money exchangers, and a rise in emigration. Over one million skilled professionals have left Pakistan in the last three years, significantly boosting official remittance inflows. Additionally, efforts to curb illicit currency trading and easing global inflation have further supported this positive trend.
Broader macroeconomic improvements have continued to drive market optimism. Inflation dropped to 4.9% in November, the lowest since April 2018, opening the door for potential monetary easing. Saudi Arabia’s decision to extend a $3 billion deposit for another year and formalised trade deals worth $560 million have reinforced foreign reserves and investor confidence.
Economic activity also remains strong, with petroleum sales hitting a 25-month high of 1.58 million tons in November. Furthermore, the government’s successful Rs353 billion Ijarah Sukuk auction has added liquidity to the financial system.
“Consistent liquidity flow from mutual funds and individuals, driven by better returns and favourable taxation treatment, has been a factor,” added Samiullah Tariq, Head of Research at Pak-Kuwait Investment Company.
Monday saw the PSX extend its rally for the ninth consecutive session. The KSE-100 Index gained 916.43 points, or 0.84%, to close at 109,970.38, with an intraday high of 110,248.98.
The upcoming State Bank of Pakistan monetary policy meeting on December 16 is a key event for investors, with expectations of a significant rate cut that could offer additional momentum to the market.
