Investor optimism surged this week as the Pakistan Stock Exchange (PSX) closed at a record high of 138,597 points, boosted by strong signs of economic recovery. The benchmark KSE-100 Index gained 4,298 points overall, marking a 3.2% increase week-on-week. A sharp rally on Monday alone added 2,203 points, pushing the index to 136,502—its highest level in history.
Momentum Driven by Key Economic Indicators
Market sentiment was powered by positive macroeconomic developments. A $2.1 billion current account surplus for FY25—the largest in 22 years—instilled confidence among traders and investors. Additionally, Pakistan’s foreign exchange reserves rose to $14.5 billion, strengthening the country’s external financial position.
Although the Pakistani rupee depreciated slightly to 284.87 against the US dollar, investor mood stayed positive. Reinforcing this trend were encouraging remarks from the International Monetary Fund’s (IMF) local representative, who acknowledged the country’s improving economic performance.
Read: Profit-Taking Caps Pauses PSX After Rally
Sectoral Gains Amplify Rally
The bullish momentum wasn’t limited to economic indicators. Key sectors, particularly fertiliser and banking, played a major role in pushing the index upward. Fauji Fertiliser Company (FFC) and United Bank Limited (UBL) led the way, supported by improved market dynamics and policy announcements.
One such policy was the National Tariff Policy 2025–30, recently unveiled to rationalize tariffs and enhance export competitiveness. This policy is expected to support industrial growth and stabilize trade imbalances in the long term, further energizing equity markets.
Trading Pattern Through the Week
While the overall mood was bullish, Tuesday and Wednesday saw brief pauses. Some investors locked in profits after Monday’s big gains, leading to a slight dip in the index. However, this phase of consolidation was short-lived.
Thursday marked another robust rebound. The PSX gained 2,285 points, largely due to heavy institutional inflows and sector-wide buying, especially in fertiliser stocks. Analysts observed that investors continued to seek value across multiple industries, reflecting growing confidence in Pakistan’s financial future.
Mixed Signals on Friday
On Friday, the index briefly crossed the 140,000 mark before settling back. Despite some profit-taking, the market ended almost flat at 138,597. Analysts at Arif Habib Limited emphasized that the overall tone remained strong. They attributed the slight dip to routine end-of-week adjustments rather than any significant shift in sentiment.
The broader picture shows a market supported by structural improvements in the economy. Fiscal reforms, export policy adjustments, and rising reserves are fostering a more stable investment environment.
Real Economy Showing Signs of Strength
Beyond the trading floor, real economy indicators further reinforced investor confidence. Auto financing rose 20% year-on-year in June 2025, reaching Rs277 billion. This jump signals increased consumer spending and higher confidence in the credit market.
In manufacturing, large-scale output rose 2.3% year-on-year in May. This uptick supports projections of sustained industrial recovery, especially with improved energy supplies and raw material availability.
These developments align with ongoing reforms aimed at strengthening fiscal discipline and expanding the tax base—two key points highlighted in recent economic briefings.
Investor Sentiment Holds Strong
Despite brief dips during the week, investor sentiment remained solid. Market participants responded positively not only to data releases but also to forward-looking policies. With IMF engagement back on track, foreign inflows increasing, and economic numbers turning favorable, the PSX is riding a wave of renewed confidence.
Looking ahead, analysts suggest keeping an eye on further announcements from the Ministry of Finance and global commodity trends, both of which could influence market dynamics in the weeks to come.
As Pakistan moves further along its economic recovery path, the PSX appears to reflect that momentum—making a compelling case for long-term optimism among domestic and foreign investors alike.
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