Moaaz Manzoor

The Pakistan Stock Exchange (PSX) has shown record volatility, driven by macroeconomic adjustments, fiscal measures, and robust liquidity flows, signaling the potential for sustained recovery and growth, reports WealthPK.

On Monday, the PSX experienced a bullish trend, gaining 4,411.27 points, a significant 4.03% increase, closing at 113,924.42 points compared to 109,513.15 points on the last trading day. The volume of shares traded surged to 857.83 million from 754.91 million, while the total value of traded shares rose to Rs50.55 billion, compared to Rs39.42 billion in the previous session. Speaking with WealthPK, Syed Zafar Abbas, General Manager at Zahid Latif Khan Securities, highlighted the role of macroeconomic policies in driving this upward momentum.

"The government's focus on inflation control and interest rate cuts to 13% has laid a foundation for macroeconomic stability, fostering investor confidence," he noted. He further emphasized the significance of initiatives such as the privatization of state-owned enterprises (SOEs), resolving capacity payment issues with independent power producers (IPPs), and addressing fiscal challenges. "The PSX’s recovery aligns with the surging exports, rising foreign exchange reserves, and a stabilized rupee, all of which contribute to a positive market outlook," Abbas remarked. Ali Najib, Head of Equity Sales at Insight Securities, attributed the bullish trend to enhanced liquidity.

"Mutual funds, which actively channel capital into the market, have created a robust liquidity base, showcasing the untapped potential of the PSX," he said. Najib projected that the market could climb further, potentially reaching the 130,000 level, driven by portfolios combining growth and dividend-yielding stocks. Both experts linked the PSX’s recent performance to coordinated fiscal and monetary strategies. These include privatizing SOEs, promoting export growth, stabilizing the rupee, and managing fiscal challenges.

Positive projections from international financial institutions such as the IMF and ADB further reinforced investor confidence. The PSX’s impressive 4.03% surge on Monday underscored its resilience amid macroeconomic challenges. Analysts believed this reflected growing optimism about the government’s strategic efforts, including measures under the Special Investment Facilitation Council (SIFC). Liquidity inflows, driven by mutual funds, would continue to support the market’s upward trajectory, bolstered by stable foreign exchange reserves and rising export performance.

However, the risks tied to the global economic conditions and domestic fiscal pressures remain pivotal factors shaping the PSX’s performance. Despite these uncertainties, structural reforms, fiscal discipline, and improved liquidity dynamics will reinforce the market's long-term growth potential. The PSX’s record trading activity and rising share value demonstrate increasing investor confidence. With proactive government initiatives, enhanced policy coordination, and favorable international projections, the market is poised for sustained recovery and long-term growth.

Credit: INP-WealthPk