The Pakistan Stock Exchange (PSX) witnessed a remarkable surge on Monday as the benchmark KSE-100 Index surpassed the 115,000-point mark for the first time in history.

The trading session began on a strong note, with the KSE-100 Index reaching an intraday high of 115,826.94 points before settling at 115,443 points by midday.

This milestone builds on last week’s record-breaking performance, when the index closed at 114,301 points, gaining 5,247 points.

According to market analysts, the surge is underpinned by robust remittance inflows, declining inflation, and expectations of monetary policy easing by the State Bank of Pakistan (SBP).

The Monetary Policy Committee (MPC) is set to announce its decision later today, and analysts predict a rate cut of 200 to 500 basis points.

Strong economic fundamentals drive rally

The PSX’s stellar performance aligns with broader economic improvements. November’s inflation rate fell to 4.9%, providing significant room for monetary easing, while the government’s decision to lower National Savings Schemes (NSS) profit rates by 250 basis points is redirecting funds into the equity market.

Additionally, remittances increased by 29% year-on-year to $2.9 billion in November, boosting foreign reserves to $16.6 billion as of December 6, 2024. Reserves held by the SBP climbed to $12.051 billion, their highest level since March 2022.

The Current Account Deficit (CAD) also narrowed sharply, falling 79% year-on-year to $217 million in the first two months of FY2025, supported by stable exports and strong remittance inflows.

Market Capitalisation and Trading Volume Soar

Last week, the PSX set multiple records, including a market capitalization crossing $52 billion—the highest in three years—and daily share trading volumes exceeding Rs1.5 billion. A total of 6.81 billion shares worth Rs302 billion were traded, with the index fluctuating within a 7,546-point range during the week.

The bullish trend continued into Monday, as businesses and investors remained optimistic about macroeconomic stability and the potential for significant monetary easing.

Positive signs across sectors

Economic activity has gained momentum, with automobile sales rising by 52% year-on-year in November, signaling robust consumer demand. The banking sector has also shown improvement, with the advance-to-deposit ratio (ADR) increasing to 47.8% in November from 44.3% in October.

The government’s efforts to modernize the power distribution network and expand social protection programs have further bolstered investor confidence. Last week, the Asian Development Bank (ADB) approved $530 million in loans to support these initiatives.

Optimism ahead of SBP announcement

The market’s performance reflects easing political uncertainties and a positive outlook for the country’s economic recovery. Analysts expect the SBP’s policy rate announcement to reinforce the bullish momentum, particularly if the central bank opts for an aggressive rate cut.

With exports projected to reach $33 billion and remittances forecasted at $33.5 billion by the end of FY2025, the PSX is expected to remain upward in the coming weeks.

“The KSE-100 Index’s historic milestone underscores renewed investor confidence in Pakistan’s economic outlook,” said a market expert. “Sustained macroeconomic stability and supportive policies will maintain this momentum.”