The stock market closed flat on Friday as investors opted to book profits after a historic rally driven by optimism ahead of corporate earnings and expectations of monetary easing.
Sana Tawfiq, Head of Research at Arif Habib Limited, stated, “Momentum is expected to continue during the results season, although intermittent profit-taking is likely.”
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index reached an intraday high of 140,585.38 points, up by 1,919.89 points or 1.38%. However, it also touched a low of 138,551.61 points, showing a marginal decline of 113.88 points or 0.08%.
According to Ahsan Mehanti, Managing Director and CEO of Arif Habib Commodities, “Stocks are trading at new all-time highs ahead of major earnings announcements and potential policy easing by the State Bank of Pakistan (SBP) amid easing inflation.” He added that expectations of strong financial results and dividend payouts were key drivers behind the bullish sentiment.
Investor confidence was also boosted by Finance Minister Muhammad Aurangzeb’s comments earlier in the week, suggesting room for a rate cut, although the final decision rests with the SBP. In its previous policy meeting, the SBP had maintained the benchmark interest rate at 11%, citing inflation concerns and geopolitical risks following the Iran-Israel conflict. The next Monetary Policy Committee meeting is expected by the end of July.
Sentiment was further lifted by SBP’s latest data, which revealed a \$23 million increase in central bank-held foreign exchange reserves, bringing the total to \$14.526 billion—surpassing the IMF’s \$13.9 billion benchmark. While overall liquid reserves fell by \$72 million to \$19.957 billion, SBP reserves rose due to multilateral inflows, remittances, and continued dollar buying from the interbank market.
Adding to the positive outlook, the government successfully raised Rs342 billion through the auction of fixed-rate Pakistan Investment Bonds (PIBs), exceeding its Rs300 billion target. Cut-off yields declined across all major tenors, reinforcing market expectations of monetary easing. Yields on two-year PIBs dropped by 54 basis points to 10.848%, three-year by 35 basis points to 11.05%, five-year by 31 basis points to 11.39%, and 10-year by 30 basis points to 12.2%. No bids were accepted for the 15-year tenure.
Friday’s flat close followed a strong rally on Thursday, when the KSE-100 Index surged by 2,285.53 points (1.68%) to settle at 138,665.49, hitting an intraday high of 138,943.47 and a low of 136,674.98 points.
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