Qudsia Bano

In an extraordinary display of market optimism, the Pakistan Stock Exchange (PSX) witnessed a bullish surge on the first working day after the Eid holidays on Monday, as the KSE-100 benchmark index soared past the 2,000-point milestone. The remarkable surge is primarily attributed to the Pakistan government’s agreement with the International Monetary Fund (IMF) on a crucial bailout package, igniting a renewed sense of confidence in the stock market.

The market opened on a positive note on Monday, with the index remaining in the green zone throughout the trading session. Such consistent upward movement led to a temporary halt in trading after the index reached its upper circuit limit, triggering a buzz among investors and market observers. Following the hour-long suspension, trading resumed, but the benchmark index continued its upward trajectory, propelling it to reach an astonishing 43,923.71 points.

This remarkable increase of 5.96% or 2,471.03 points reflects the growing optimism and enthusiasm within the market. Hamza Anwar, Equity Manager at Zahid Latif Khan Securities, acknowledged that the surge in the KSE-100 benchmark index is a positive sign for the market and reflects the market’s immediate response to the IMF deal. He highlighted that the market opening in the green zone and remaining positive throughout the session demonstrates the growing confidence among investors. According to Hamza, the consensus with the IMF provides a much-needed boost to Pakistan’s economic stability amidst its severe economic and political crises.

The $3 billion short-term financial package, pending approval by the IMF board, offers a lifeline for Pakistan and serves as a clear roadmap to navigate through the challenges ahead, he opined. He emphasized that the easing of uncertainty in the balance of payments is a crucial factor driving positive market sentiment. “The availability of financial support from the IMF will mitigate the risk of default and provide reassurance to investors who had been fleeing the market due to concerns over political turmoil,” he added.

Hamza believes that the positive momentum generated by the IMF deal is likely to have a sustained impact on the market. “Investors are responding favorably to the economic roadmap provided by the agreement, which gives them confidence in the country’s economic prospects for the next nine months,” he further said.

“Companies grappling with circular debt have gained a competitive edge in the market and are exhibiting promising performance, largely attributable to the IMF’s prioritization of governmental entities and the need to address circular debt challenges. Notable examples of such companies encompass PSO, Sui Northern, and OGDCL,” he added. While the package is still awaiting final approval from the IMF Board, its potential implications have already resonated positively with investors, leading to an impressive surge in the market.

The positive market response reflects a growing belief that the economic roadmap provided by the IMF deal will steer Pakistan through its current crises and set the stage for long-term growth and stability. The reduction in uncertainty, the availability of financial support, and the economic roadmap provided by the agreement are all contributing factors to the current bullish trend. However, to ensure sustained economic recovery, Pakistan must address its long-term financial challenges and implement effective policies that reduce dependence on external assistance.

Credit : Independent News Pakistan-WealthPk