The stock market made a strong recovery on Wednesday, reversing the losses from Tuesday’s significant correction when the KSE-100 Index dropped over 1,000 points. Investor optimism, spurred by improving macroeconomic indicators and expectations of monetary easing, drove the market’s rebound.
The Pakistan Stock Exchange (PSX) benchmark KSE-100 Index surged by 2,108.41 points, or 1.94%, reaching an intraday high of 111,005.06, reflecting renewed investor interest amid signs of broader economic stability.
Ahsan Mehanti, Managing Director and CEO of Arif Habib Commodities, attributed the rally to the reduction in National Savings Scheme (NSS) rates, which sparked speculation of a significant policy easing by the State Bank of Pakistan (SBP) on December 16. The market was further buoyed by strong economic indicators, a stable rupee, and a recovery in global equities amid easing geopolitical tensions.
The reduction in NSS profit rates, particularly the 250 basis point cut in the Savings Account rate to 13.5%, is expected to direct funds into the equity market. Additionally, improvements in remittance inflows, which reached $14.8 billion in the first five months of FY2025, have added to the positive market sentiment. Inflation has also eased to 4.9% in November, setting the stage for anticipated interest rate cuts.
The market’s optimism is further supported by foreign reserves, bolstered by Saudi Arabia’s $3 billion deposit extension and significant trade agreements. Investors are now closely monitoring the government’s fiscal measures and upcoming SBP monetary policy decisions, which could impact market sentiment and banking profitability.
Despite recent volatility, analysts are optimistic about the PSX’s outlook, with macroeconomic stability and continued remittance inflows expected to fuel further growth.
