Stocks retreat after hitting record high, snapping multi-session rally

• Analysts attribute rally to power tariff cuts, plan to cut circular debt.
• Prime minister's power tariff relief announcement also drove rally.
• Nearly 60-year low inflation also helped boost investor morale.

Stocks zoomed to a record high on Friday, fuelled by optimism over the government's electricity relief package, falling inflation, and hopes linked to the IMF loan programme before reversing gains as investors opted to book profits.

The Pakistan Stock Exchange's (PSX) benchmark KSE-100 Index surged to a fresh all-time intraday high of 120,796.67 — gaining as much as 1,858.56 points, or 1.56% — before succumbing to profit-taking.

Eventually, the index closed in the red, snapping a multi-session winning streak.

The KSE-100 Index shed 146.45 points, or 0.12%, to settle at 118,791.66. The day’s low was recorded at 118,718.26. The total traded volume stood at 313.4 million shares, while the traded value clocked in at Rs27.8 billion. The previous close was 118,938.11 points.

“The market made a new high yesterday on the back of electricity cuts and a permanent plan to resolve circular debt. This gave the market a shot of confidence,” said Ahfaz Mustafa, CEO of Ismail Iqbal Securities.

“This was again coupled with a multi-decade low on inflation, and expectations of receiving the IMF tranche is driving the market to new highs.”

The bullish momentum has been driven by Thursday’s announcement by Prime Minister Shehbaz Sharif, who slashed power tariffs by up to Rs7.69 per unit for domestic consumers and Rs7.59 for industrial units. 

The premier termed it a key step to ease the economic burden on households and boost industrial competitiveness. 

The move followed approval from the IMF, which had earlier cleared a Re1 per kilowatt reduction in utility rates under its $7 billion Extended Fund Facility (EFF).

In a further boost to sentiment, inflation data released by the Pakistan Bureau of Statistics (PBS) showed Consumer Price Index (CPI) inflation rose only 0.7% year-on-year in March 2025, down from 1.5% in February and dramatically lower than the 20.7% recorded in March 2024. 

Analysts at Arif Habib Limited (AHL) described it as the lowest inflation reading since December 1965. On a month-on-month basis, CPI rose by 0.9% in March, compared to a 0.8% decline in the previous month.

The average CPI inflation for the first nine months of the fiscal year (9MFY25) now stands at 5.25%, compared to 27.06% in 9MFY24, significantly strengthening expectations for further monetary easing by the State Bank of Pakistan (SBP).

The market had already set a bullish tone on Thursday, the first trading session after the long Eid holidays. The KSE-100 Index surged by 1,131.36 points, or 0.96%, to close at 118,938.11, up from 117,806.75. The index touched a high of 119,179.46 and a low of 117,508.07 during the session.