PSX extends gains on pre-budget optimism, IMF talks

The Pakistan Stock Exchange (PSX) continued its bullish trend on Tuesday, driven by optimism surrounding the upcoming federal budget, potential expansion of the International Monetary Fund (IMF) loan program, and improving economic indicators.

The benchmark KSE-100 Index surged by 1,559.5 points (1.36%), reaching an intraday high of 115,889.60, while the session’s low was recorded at 114,900.46. Investors actively capitalized on key value stocks, particularly in anticipation of fiscal incentives for the construction sector in the upcoming budget.

Investor confidence was further boosted by Finance Minister Muhammad Aurangzeb’s recent statements regarding economic reforms and industry support. Ahsan Mehanti, managing director of Arif Habib Commodities, attributed the market’s rally to expectations of a construction package in the federal budget, along with strong economic indicators, increasing foreign exchange reserves, and anticipated IMF climate funding approvals.

Additionally, the IMF’s technical team on climate finance has commenced discussions with Pakistani authorities regarding a potential carbon levy in the upcoming budget. These negotiations aim to supplement Pakistan’s 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 scheduled to visit Islamabad on March 4 for in-depth discussions, with a report expected within 4 to 6 weeks, pending a successful staff-level agreement.

If approved, Pakistan’s total IMF funding could increase to between $8.2 billion and $8.5 billion. The finance minister also reiterated the government’s commitment to expanding the tax base, strengthening foreign exchange reserves, and supporting business growth.

Recent economic indicators, including rising remittance inflows and increased participation in Roshan Digital Accounts (RDA), further fueled market optimism. The government has also expressed strong support for the construction sector while aiming to regulate speculative activities in real estate.

Despite early-session volatility, the PSX rebounded strongly, with mid-session value hunting driving gains. On Monday, the KSE-100 Index closed at 114,330.10 points, rising by 1,529.17 points (1.36%) after initially dipping to 111,857.34.