PSX is increasing in hopes of reducing interest rates, the progress of circular debt restructuring

• The KSE-100 index closes at 114,398.69, up 685 points.
• Intractional High Prices 114,721,58, increased 1,008 points.
• The reference index sees low of 114,169.19, up 456 points.
  

The stock market has expanded its upward momentum on Friday, enhanced by expectations to reduce policy interest rate, progress in restructuring circular debt and continuing positive investment feeling.

Market participants were involved in the market for activity in basic sectors, especially in cement and energy reserves, as optimism increased before the announcement of the monetary policy of the Pakistani State Bank (SBP) on March 10.

The sensitive price index (SPI) has also shown a fall, enhancing expectations that the inflation elements in March will be lower, further supportive feeling.

The Pakistani Stock Exchange (PSX) reference index won 685.52 points, or 0.6%, closing at 114,398.69. The reference index touched an intraodam high of 114,721.58, while the lower level was recorded at 114,169.19.

“One factor that drives the market is the news of circular debt resolution, which has led to an increase in PSO and other relevant shares. Secondly, the cement sector delivers well, most likely awaiting the reduction of the policy rate expected on March 10.

“Finally, the SPI number (sensitive price index) has shown a decline, which reinforces the expectations that the inflation elements in March will also be lower, providing another positive market signal,” he added.

The Pakistani government plans to borrow RS1.25 trillion from commercial banks to restructure old loans and withdraw circular debt. According to Topline Research, bank presidents met with government officials in Islamabad on Thursday to discuss the ways of lending plan, which has also been shared with the International Monetary Fund (IMF).

While discussions are continuing, some banks have expressed concerns about the interest rate offered by the government, the Kibor minus is reportedly 1%. An agreement is expected in the coming days.

Meanwhile, Pakistan’s inflation rate was a sharp decline in February 2025, reducing 1.5% on an annual basis (on an annual basis), marking the lower level since September 2015, according to the Pakistan Office Statistics (PBS).

Inflation decreased by 0.9% month in February, compared to an increase of 0.2% in January. The average inflation for the first eight months (July-February) of the financial year amounted to 5.85%, significantly lower than the 27.96% recorded in the same period last year. Inflation reduction has boosted expectations for further monetary relaxation when SBP announces its next policy decision on March 10.

On the outside front, Pakistan’s Central Bank reserves increased by $ 27 million to $ 11.25 billion during the week ended on February 28, SBP said on Thursday.

However, the total liquid foreign stocks of the country dropped $ 52 million to $ 15,874 billion, as commercial bank stocks dropped by $ 79 million to $ 4,624 billion. Despite the slight increase in SBP stocks, external debt yields and the widening deficit of the current account remain key risks to overall stability.

The PSX had already seen a strong recovery on Thursday, with the KSE-100 reference index increased by 1,459.42 points, or 1.3%, closing at 113,713.18 points. The highest indicator of the day was recorded in 113,871.22 points, while the lowest level was 112,446.01.