Shares at Pakistan Stock Exchange Climb 700 Points on Hopes of Lower Inflation Numbers

Shares at the Pakistan Stock Exchange (PSX) surged more than 700 points in intraday trading on Monday, driven by expectations of lower inflation numbers.

The benchmark KSE-100 index rose by 704.08 points, or 0.9 percent, reaching 79,149.04 at 11:15am, up from the previous close of 78,444.96 points.

Mohammed Sohail, the chief executive of Topline Securities, attributed the rally to investors "building new positions amid expectations of lower CPI (Consumer Price Index) reading."

He also noted that there was optimism about the International Monetary Fund (IMF) staff-level agreement (SLA) being reached soon following the passage of the tax-laden budget.

Raza Jafri, the chief executive of EFG Hermes Pakistan, emphasized that the passage of the FY25 budget was a "big step towards securing an IMF programme" and was being received positively by investors.

"The inflation print is also due, and rate cuts are expected to continue in the next monetary policy. These factors are drawing local flows into equities," he added.

Yousuf M. Farooq, director of research at Chase Securities, linked the market's upward trajectory to the "passing of the budget, which should lead to Pakistan securing its next IMF programme."

"A new IMF programme would bring stability to the external front and maintain a check on Pakistan’s fiscal account," he explained.

Additionally, he noted that "lower inflation going forward should lead to a gradual decline in interest rates and a gradual upward re-rating of the market."

Awais Ashraf, director of research at AKD Securities, shared similar sentiments.

He remarked, "Approval of the budget in line with IMF requirements has bolstered investor confidence, as the likelihood of securing a new bailout package has improved."