Profit-taking halts PSX surge as investors lock in gains
The stock market witnessed a pullback on Tuesday as profit-taking and broader market corrections erased some of the recent gains following the record-breaking rally that had propelled the market past the 111,000-point milestone earlier in the session as investors opted to lock in profits.
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index closed at 108,896.65, down 1,073.73 points, or -0.98%. The session saw an intraday high of 111,759.58 and a low of 107,711.40.
Despite the correction, analysts believe the market retains its long-term bullish outlook, underpinned by strong macroeconomic fundamentals and favorable economic indicators.
“Anticipation of a rate cut, lower inflation numbers, improved liquidity—particularly buying from funds—and low bond yields making equities an attractive asset class are the key drivers,” said Sana Tawfik, Head of Research at Arif Habib Limited.
The rally highlights improving sentiment around Pakistan’s economic outlook, driven by declining inflation, stronger foreign reserves, and increased economic activity. Investors remain encouraged by ongoing reforms and the potential for further monetary easing, setting the stage for sustained market momentum in the days ahead.
Remittances reached $14.8 billion during the first five months of FY2025, marking a 33.6% year-on-year increase, according to the State Bank of Pakistan (SBP). November alone saw inflows of $2.9 billion, up 29.1% from the same month last year, though slightly lower than October’s figure.
Key drivers behind this growth include a stable rupee, government incentives for banks and money exchangers, and a rise in emigration. Over one million skilled professionals have left Pakistan in the last three years, significantly boosting official remittance inflows. Additionally, efforts to curb illicit currency trading and easing global inflation have further supported this positive trend.
Broader macroeconomic improvements have continued to drive market optimism. Inflation dropped to 4.9% in November, the lowest since April 2018, opening the door for potential monetary easing. Saudi Arabia’s decision to extend a $3 billion deposit for another year and formalised trade deals worth $560 million have reinforced foreign reserves and investor confidence.
Economic activity also remains strong, with petroleum sales hitting a 25-month high of 1.58 million tons in November. Furthermore, the government’s successful Rs353 billion Ijarah Sukuk auction has added liquidity to the financial system.
“Consistent liquidity flow from mutual funds and individuals, driven by better returns and favourable taxation treatment, has been a factor,” added Samiullah Tariq, Head of Research at Pak-Kuwait Investment Company.
Monday saw the PSX extend its rally for the ninth consecutive session. The KSE-100 Index gained 916.43 points, or 0.84%, to close at 109,970.38, with an intraday high of 110,248.98.
The upcoming State Bank of Pakistan monetary policy meeting on December 16 is a key event for investors, with expectations of a significant rate cut that could offer additional momentum to the market.
