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Pakistan's KSE-100 Index Soars 1.3% Amid Positive IMF Outlook and Market Optimism
Pakistan’s stock market sees a major boost, with KSE-100 up by 1.3% amid reports of IMF’s potential tax target revision and expectations of an interest rate cut. The market reacts positively to improving economic indicators.
ND
by News Desk
2025-03-06
Pakistan's KSE-100 Index Soars 1.3% Amid Positive IMF Outlook and Market Optimism

The benchmark KSE-100 index surged by 1.3% on Thursday, gaining 1,459.41 points to close at 113,713.17, up from the previous close of 112,253.76. The significant rally, which saw the index climb from 113,243.27 at 11:56am to 113,507.53 by 12:35pm, was fueled by optimism surrounding Pakistan’s economic prospects.

 

The market’s positive response was largely driven by media reports suggesting that the International Monetary Fund (IMF) might revise Pakistan’s tax targets downward. Yousuf M. Farooq, Director of Research at Chase Securities, explained that the expectation of a reduction in the target — potentially lowering it from Rs12.9 trillion to Rs12.5 trillion — was due to an overall slowdown in economic activity and a tax revenue shortfall.

 

Finance Minister Muhammad Aurangzeb had confirmed that discussions between Pakistan and the IMF were progressing smoothly for the first biannual review of Pakistan’s $7 billion Extended Fund Facility (EFF), which had been initiated in July. This news boosted investor confidence, as it was seen as a sign that Pakistan was "well-positioned" for continued economic support.

 

Farooq also noted that the decline in global oil and coal prices had led to downward revisions in inflation estimates, which had previously been expected to reach 10% by June 2025. As inflation projections were revised lower, market participants began adjusting their expectations for future interest rate decisions, with many anticipating a potential pause in rate hikes.

 

Sana Tawfik, Head of Research at Arif Habib Limited, attributed much of the bullish market momentum to expectations surrounding the upcoming Monetary Policy Committee (MPC) decision, which is due on March 10. Analysts are predicting a 50 basis point rate cut, spurred by declining international oil prices and improved liquidity from local institutional investors.

 

Investor sentiment was further buoyed by a rare public gesture of appreciation from US President Donald Trump, who thanked Pakistan for its role in the capture of the individual responsible for killing 13 US service members. Awais Ashraf, Director of Research at AKD Securities, noted that this "positive response" from the US had helped ease uncertainty surrounding Pakistan-US relations, adding to the market’s optimism.

 

In addition to these developments, analysts pointed to the improving odds of a successful IMF review, which could unlock further funding for climate-related initiatives, further boosting investor sentiment.

 

The stock market had struggled in recent sessions, with the KSE-100 index slipping into the red zone due to a lack of positive triggers, mixed investor sentiment, and external factors such as the slump in global crude oil prices and concerns over rising tariffs. However, with the IMF review and the potential for favorable economic measures on the horizon, market confidence has been restored.

 

The $7 billion IMF programme is designed to help Pakistan achieve macroeconomic stability and foster more inclusive, resilient economic growth. As a nine-member IMF mission begins its first biannual review of the programme, the market will be closely watching for further developments.
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