Moaaz Manzoor

The Pakistan Stock Exchange's historic surge to 95,000 points underscores the impact of interest rate cuts, currency stability, institutional investments, and political steadiness, reflecting growing economic optimism and investor confidence.

Talking to WealthPK, Syed Kashan Kazmi, Managing Director of Integrated Equities Limited, emphasized that the Pakistan Stock Exchange’s performance remains independent of the International Monetary Fund (IMF) negotiations. However, he noted that the government's commitment to the IMF’s  three-year program would yield significant short- to medium-term economic benefits. He highlighted the pivotal role of the recent interest rate cut, which has redirected funds from the fixed-income assets to equities, igniting a mutual fund rally. Additionally, the rupee’s stability has strengthened the market sentiment, with the State Bank of Pakistan (SBP) purchasing $1.3 billion during June and July to maintain currency stability.

Between November 1 and 14, mutual funds contributed $29.5 million, brokers $2.66 million, insurance companies $5.55 million, and others $2.97 million, collectively driving a $40.68 million average inflow, Kazmi noted. This institutional investment bolsters the market's upward momentum and reinforces confidence in the economic progress. Faraz Hanif, a trader at the General Investment & Securities, echoed these sentiments, underscoring the broader economic factors influencing the bullish market. He pointed to a combination of interest rate cuts, the rupee’s stability against the US dollar, and increasing foreign investment as the key drivers of the surge.

 “The investors are viewing these developments as a signal of hope, fuelling the unprecedented rally in the market,” Hanif explained. The PSX's rally also reflects a broader alignment of fiscal and monetary policies aimed at sustainable growth. Targeted support for export-oriented industries and efforts to control inflation are central to creating a stable economic environment. Market analysts believe the political stability observed in recent months has further cemented the investor confidence, encouraging long-term investments and reducing market volatility.

This historic rise comes amidst an environment of improving macroeconomic indicators. With the economy showing signs of recovery and institutional investors actively supporting the index, the KSE-100's performance signals a positive trajectory for Pakistan's financial markets. Experts remain optimistic that consistent policy reforms and a commitment to economic stability will sustain the momentum, paving the way for continued growth in the stock exchange and broader economic resilience.

The surge in Pakistan’s stock market to a record-breaking 95,000 points reflects a confluence of stabilizing economic policies, targeted fiscal measures, and less political uncertainty. These factors and institutional investments and interest rate adjustments have boosted investor sentiment. However, sustaining this growth will require ongoing reforms to ensure currency stability, boost exports, and attract foreign investments. The PSX’s rally underscores a broader sense of economic recovery and sets the tone for future growth, provided that policy consistency and investor confidence remain intact.

Credit: INP-WealthPk