The capital market surged on Tuesday, furthering its gains as investor optimism soared ahead of the upcoming federal budget and prospects of an expanded International Monetary Fund (IMF) loan programme.
Strong economic indicators further reinforced market confidence, driving an aggressive rally across key sectors.
The rally was propelled by heightened investor anticipation of fiscal incentives for the construction sector, expected to be unveiled in the budget. Finance Minister Muhammad Aurangzeb’s recent assurances of policy support and sweeping economic reforms further bolstered sentiment, igniting strong buying interest in the market.
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index surged 1,559.5 points (1.36%), reaching an intraday high of 115,889.60, while the session’s low stood at 114,694.91, as investors capitalised on value stocks across key sectors.
Ahsan Mehanti, Managing Director of Arif Habib Commodities, highlighted the drivers behind the bullish activity, saying: “Pre-budget rally witnessed as investors weigh FM hints over a construction package in the federal budget, robust economic indicators for remittances, inflation, and foreign exchange reserves, as well as hopes for $1 billion IMF climate funding approvals ahead of the IMF review under EFF.”
“Higher global crude oil prices and government deliberation over the privatisation of SOEs played a catalyst role in the bullish activity at PSX,” he added
Meanwhile, the IMF’s technical team on climate finance initiated discussions with Pakistani authorities on Monday, exploring the potential imposition of a carbon levy in the upcoming budget. The negotiations are part of efforts to augment the existing $7 billion Extended Fund Facility (EFF) with an additional $1.2 to $1.5 billion under the Resilience and Sustainability Facility (RSF).
The IMF review mission is expected to visit Islamabad from March 4, engaging in 10 to 12 days of discussions on various economic sectors before presenting its report to the IMF Executive Board within 4 to 6 weeks, contingent upon a successful staff-level agreement.
If finalised, Pakistan’s total IMF funding could increase to between $8.2 billion and $8.5 billion.
Finance Minister Muhammad Aurangzeb reiterated the government’s commitment to expanding the tax base, boosting foreign exchange reserves, and facilitating business growth.
Addressing journalists in Lahore on Sunday, he emphasised the rising number of remittance senders—now at 35 million—and the increasing inflows into Roshan Digital Accounts (RDA).
Aurangzeb further stressed the government’s support for the construction industry while ensuring to curb speculative activities in the real estate sector.
Speaking at a separate event in Faisalabad a day earlier, he reaffirmed that Pakistan’s economy is progressing due to structural reforms, highlighting the lower policy rate, single-digit inflation, and growing tax revenues as signs of economic stability.
The PSX experienced early-session volatility, with the KSE-100 initially facing selling pressure before rebounding on mid-session value-hunting. The benchmark index closed at 114,330.10 points on Monday, gaining 1,529.17 points (1.36%), after hitting a low of 111,857.34 earlier in the session.
