The bulls returned to the Pakistan Stock Exchange (PSX) on Monday, driving shares up over 500 points. Analysts credited the rally to hopes that political parties would soon reach an agreement on forming the government.
Last week, doubts about the formation of a new coalition government, amid protests against alleged election manipulation, had kept market sentiment low. The KSE 100-share index had closed at 59,872.96 points, dropping by 4.9% week-on-week.
Today, the index traded sideways with volatility, but closed with a gain of 0.98% at 60,226.43 points. Shahab Farooq of Next Capital Limited noted that political uncertainty continued to cause volatility, but positive sentiments were fueled by hopes of a settlement between the PML-N and PPP, the Supreme Court adjourning a hearing on an election petition, and recovery in international bonds.
Mohammed Sohail of Topline Securities also attributed the upward trend to hopes of a government formation agreement, despite previous futures contracting.
Faran Rizvi of JS Global emphasized the importance of analyzing upcoming government policies for long-term economic stability. He suggested that while the market may experience instability until the new government is formed, banking stocks could be a resilient long-term investment, benefiting from economic recovery and supportive policy measures.