July 8, 2025: The Pakistan Stock Exchange (PSX) continued its remarkable upward trend on Monday, as the KSE-100 index surged past the 133,000 mark, driven by investor optimism surrounding the newly passed federal budget and favorable economic indicators.
At 11:20 AM, the benchmark KSE-100 Index climbed by 1,771.48 points (1.34%) to reach 133,720.54, up from the previous close of 131,949.06. The rally marked the seventh consecutive bullish session, extending strong gains made in the first week of the new fiscal year, during which the market posted a 6.1% increase.
Key Drivers of the Rally
Analysts attributed the momentum to a combination of fiscal incentives, improving macroeconomic trends, and growing investor confidence.
“A favourable taxation regime for equities and the increasing likelihood of equities outperforming other asset classes have channelled flows towards the stock market,” said Awais Ashraf, Director of Research at AKD Securities.
He also pointed to the ongoing monetary easing, supported by falling inflation, disciplined fiscal policy, and progress on structural reforms, as factors keeping equities in focus.
Similarly, Yousuf M. Farooq, Research Director at Chase Securities, described the market as being in Phase 2 of a bull run, characterized by:
- Increased retail participation
- Higher trading volumes
- Broad-based sectoral gains
Farooq added that the smooth passage of the Finance Act 2025–26, geopolitical stability, positive developments on circular debt resolution, and a potential trade agreement with the U.S. have all helped boost sentiment.
Advice for Investors
Despite the current momentum, experts advised caution and long-term thinking.
“Retail investors should align their strategies with their risk appetite and avoid reacting emotionally to short-term fluctuations,” Farooq noted.
While acknowledging the presence of speculative pockets—a typical feature in bull markets—he emphasized that valuations remain reasonable, and that forward returns are expected to normalize compared to the exceptional gains of the past two years.
Macroeconomic Support
The stock market’s optimism is underpinned by positive macroeconomic indicators:
- Inflation dropped to a nine-year low of 3.2% in June, down from 3.5% in May.
- The monthly trade deficit for June narrowed to $2.3 billion — a 9% drop month-on-month.
- The full-year trade deficit for FY25 stood at $26.3 billion, marking a 9% increase from FY24, but still within manageable range.
With growing momentum, fiscal clarity, and stabilizing economic conditions, Pakistan’s equity market appears poised to remain a strong performer in the near term — though analysts continue to urge realistic expectations and disciplined investing.
