The stock market ended flat on Friday after a record-setting rally earlier in the week, as investors locked in profits while remaining optimistic about upcoming corporate earnings and possible monetary policy easing.
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index saw mixed movement throughout the session. It reached an intraday high of 140,585.38 points—up 1,919.89 points or 1.38%—but also dipped to a low of 138,551.61 points, down 113.88 points or 0.08%. The flat close reflected a balance between bullish sentiment and cautious profit-taking.
“Momentum to continue amid result season. However, there will be episodes of profit taking,” said Sana Tawfiq, Head of Research at Arif Habib Limited.
Investors were initially encouraged by strong earnings forecasts and expectations that the State Bank of Pakistan (SBP) may ease interest rates in the near future. The optimism followed remarks by Finance Minister Muhammad Aurangzeb earlier in the week, who hinted that there was room for a rate cut, though the final decision lies with the SBP.
Earnings Hopes and Monetary Easing Expectations Support Sentiment
Investor mood was buoyant throughout the week due to a mix of positive economic indicators and policy signals. Ahsan Mehanti, Managing Director of Arif Habib Commodities, stated, “Stocks are trading at a new all-time high ahead of major earnings announcements due next week and likely SBP policy easing amid thin inflation.”
Mehanti added, “Expectations over strong financial results and annual payouts played a catalyst role in bullish activity at PSX.”
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Adding to the positive environment, the SBP’s latest foreign exchange data showed a $23 million rise in reserves, bringing the total to $14.526 billion for the week ending July 11—above the IMF’s $13.9 billion benchmark. Although overall liquid reserves declined by $72 million to $19.957 billion, the growth in SBP-held reserves was supported by multilateral inflows, remittances, and steady interbank market interventions.
The last monetary policy meeting of the SBP had maintained the key interest rate at 11%, citing inflation concerns and regional geopolitical uncertainty. However, the latest data has raised expectations that the SBP may lower the rate during its upcoming policy meeting, which is expected by the end of July.
Bond Auction Results Reinforce Optimism in Stock Market
Further strengthening the positive market sentiment, the government raised Rs342 billion through the auction of fixed-rate Pakistan Investment Bonds (PIBs), surpassing the target of Rs300 billion. The drop in cut-off yields across multiple tenors indicated investor confidence in future monetary easing.
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The yield on two-year PIBs fell by 54 basis points to 10.848%, while three-year bonds declined by 35 basis points to 11.05%. The five-year yield dropped 31 basis points to 11.39%, and the 10-year bond yield decreased 30 basis points to 12.2%. No bids were accepted for the 15-year bond, but the broader decline in yields underscored growing confidence in a lower interest rate environment.
This auction followed Thursday’s strong session where the KSE-100 Index had surged by 2,285.53 points, or 1.68%, to close at 138,665.49. The index touched an intraday high of 138,943.47 points and a low of 136,674.98 points during that session, marking one of the most bullish days of the year.
While Friday’s session closed with little change, the overall outlook for the stock market remains positive, driven by hopes of strong corporate earnings, robust economic data, and anticipated rate cuts. Analysts believe that despite intermittent profit-taking, the market is poised to remain strong in the coming weeks.
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