The market's strong performance reflects the impact of stabilising macroeconomic indicators and expectations of further monetary easing.

The Pakistan Stock Exchange's (PSX) benchmark KSE-100 Shares Index surged further, adding 1,086.3 points, or 0.48%, to hit a new intraday high of 104,361.24, with investor sentiment buoyed by a record drop in inflation and hopes for continued economic reforms.

The day’s trading began on a ceremonial note as Federal Minister for Planning Ahsan Iqbal rang the traditional gong to commence trading at the Pakistan Stock Exchange.

During the event, Ahsan Iqbal highlighted the government’s commitment to economic stability and long-term growth. “Crossing the 100,000 mark in the 100-Index showcases Pakistan’s potential to the world,” he said.

He recalled past milestones, saying, “In three years, we attracted $25 billion in investment from China and controlled load-shedding.” He also noted that PricewaterhouseCoopers had projected Pakistan as a developing nation until 2030.

Addressing Pakistan’s recent challenges, Iqbal observed, “In April 2022, when we took charge, Pakistan was on the verge of default. The choice was to save politics or the state.” He credited the government’s tough decisions, such as increasing energy prices and delaying elections, for stabilising the economy.

“Inflation has dropped from 38% to below 5% in two years, and the stock market has soared from 30,000 to 100,000 points,” he noted, highlighting the PSX as one of the most successful markets globally.

PSX Chairperson Dr Shamshad Akhtar highlighted the significance of Pakistan’s robust capital market and its recent achievements.

“Ahsan Iqbal has been a voice for developing countries at the United Nations,” remarked Dr Shamshad Akhtar, who praised the federal minister’s contributions to global and national economic progress.

She noted that the Pakistan Stock Exchange remains one of the best-performing markets in the region and the world, driven by strong economic indicators and policies.

Dr Akhtar emphasised the role of the government in fostering market growth through targeted programs.

“Crossing 100,000 points last week has brought renewed enthusiasm to the market,” she said, adding that the PSX’s ability to finance long-term developmental projects makes it a critical asset for Pakistan’s economic future.

Reflecting on the market’s performance, Dr Akhtar pointed out that the PSX has delivered a 7% return in dollar terms over the past five years.

She also underscored the importance of partnerships with the Chinese consortium in supporting the exchange’s growth journey, asserting that crossing the 100,000-point milestone in the KSE-100 Index highlights Pakistan’s potential to the world.

A significant factor in today’s rally was Prime Minister Shehbaz Sharif's optimism regarding a potential reduction in the key policy rate by the State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) in its upcoming meeting, which analysts believe will provide further impetus to the equity markets.

Addressing a federal cabinet session on Monday, expressed optimism about a further reduction in the SBP’s policy rate.

the premier highlighted the 4.9% inflation rate recorded in November — the lowest in six-and-a-half years — as a game-changer for the country’s economic landscape.

He stressed that such a decline not only alleviates the financial burden on the masses but also paves the way for economic growth. "The decrease in inflation not only reduces the financial burden on the masses but also opens avenues for economic growth," he said.

The premier added that achieving stability must now transition into fostering GDP growth, exports, industrial development, and job creation.

He attributed the development to effective economic policies and expressed optimism about a further reduction in the SBP’s policy rate.

Inflation data released by the Pakistan Bureau of Statistics (PBS) showed a significant slowdown, beating forecasts of 5.8%-6.8%.

“It is beyond imagination,” said the Prime Minister, recalling inflation levels of 3.5% during the previous tenure of the Pakistan Muslim League-Nawaz (PML-N).

Analysts note that the cooling price pressures reflect a mix of improved monetary measures and stabilising economic fundamentals and view this as a clear signal of easing price pressures, which could prompt the SBP to cut interest rates further, creating a more conducive environment for equity markets.

Monday’s session set the tone for today’s rally, with the KSE-100 gaining 1,917.62 points to close at a record 103,274.94.

Sectors like banking, technology, and oil and gas exploration led the gains last, with banking stocks benefitting significantly from recent regulatory changes, such as the removal of the Minimum Deposit Rate (MDR) requirement for corporate deposits.

As the PSX continues to explore unprecedented territory, market analysts anticipate sustained growth, supported by consistent policy measures, stabilised external accounts, and reduced costs of doing business.