PSX rebounds as buying resumes amid earnings season optimism

• PSX sees strong rally, KSE-100 Index closes at 111,377.96.
• Benchmark index jumps 1,055 points, up 0.96%.
• Records intraday high of 111,622.72, and low of 109,948.57.

The stock market saw a strong recovery on Monday, as investor sentiment improved following weeks of selling pressure.

The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index surged by 1,055.03 points, or 0.96%, to close at 111,377.96. The index touched an intraday high of 111,622.72, while the session’s lowest level stood at 109,948.57, reflecting renewed investor confidence following recent corrections.

Market analysts attributed Monday’s surge to attractive valuations and renewed investor confidence following recent corrections.

Sana Tawfik, Head of Research at Arif Habib Limited, explained the shift in sentiment, saying: "In the past few weeks, we had observed selling pressure, but now the market has somewhat consolidated, and people have moved towards the buying side. Additionally, upcoming results are also providing support.”

“Due to the previous selling, stocks had already reached attractive levels, which has led to increased buying. Furthermore, the market will receive support from certain sectors and companies that are expected to report strong results. So, the combination of earnings season and buying activity is the reason behind this trend," she added.

This shift in momentum was evident in broad-based buying across multiple sectors, particularly in banking, cement, and energy stocks, which are expected to post strong earnings reports in the coming days.

Meanwhile, the Ministry of Finance and Revenue clarified reports regarding the International Monetary Fund’s (IMF) ongoing visit to Pakistan, emphasising that the mission is conducting a Governance and Corruption Diagnostic Assessment (GCDA).

According to a statement released on Sunday, the IMF’s visit aims to assess governance practices and anti-corruption measures.

The ministry highlighted that the IMF has long played a role in promoting public sector transparency, accountability, and economic governance. The ongoing assessment is part of broader efforts to ensure sustainable economic management.

In another positive development for the economy, brokerage firm Arif Habib Limited (AHL) projected that the Consumer Price Index (CPI) for February would ease to 1.99% year-on-year (YoY)—the lowest inflation rate recorded in nearly a decade.

The forecast is based on the first week’s data from the Sensitive Price Index (SPI), which also suggests a month-on-month (MoM) CPI decline of 0.37%.

The falling inflation trend has raised expectations of continued monetary easing by the State Bank of Pakistan (SBP), which recently cut its policy rate to 12% on January 27.

Fitch Ratings, in a note released on Thursday, acknowledged Pakistan’s progress in restoring economic stability and rebuilding external buffers.

The agency highlighted that continued structural reforms will be crucial for securing additional funding from the IMF and other international lenders.

Fitch noted that consumer price inflation had fallen significantly—from an average of nearly 24% in FY24 to just over 2% in January 2025, a key factor in the SBP’s recent rate cut decision.

The PSX’s recovery on Monday follows a volatile trading week, during which the benchmark KSE-100 Index closed at 110,322.93 on Friday.

The previous week had been marked by profit-taking, political uncertainty, and concerns over the upcoming IMF review, leading to selling pressure across the board.