The Pakistan Stock Exchange (PSX) continued its rally on Wednesday, buoyed by optimism after Fitch Ratings

The Pakistan Stock Exchange (PSX) continued its rally on Wednesday, buoyed by optimism after Fitch Ratings backed the country’s prospects of securing an International Monetary Fund (IMF) bailout due to the recently proposed budget.

The benchmark KSE-100 index gained 1646.24 points or 2.15% to trade at 78,353.01 points during the intra-day trade, up from the previous close of 76,706.77 points. 

The federal government has set a challenging tax revenue target of Rs13 trillion for FY25, a near-40% jump from the current year, and a sharp drop in its fiscal deficit to 5.9% of GDP from 7.4% for the current year.

Pakistan had to reduce its fiscal deficit as part of negotiations with the IMF, with which it is discussing a loan of $6-8 billion, as it seeks to avert a debt default for an economy growing at the slowest pace in the region.

In a statement a day earlier, Fitch Ratings said Pakistan’s ambitious FY25 budget strengthens prospects for an IMF deal “We believe a new IMF deal will be agreed, underpinning other external funding.”

Intermarket Securities Director of Research Saad Ali, while speaking to Thenews.com.pk, said that the market rally continues as optimism for another IMF programme has risen following the budget and base power tariff hike before Eid holidays.

“Fitch rating thinks that the Budget is good enough for an IMF program. Also, [the] market [is] taking positively PM’s plan to reduce power tariff for industries,” Ali added.

Arif Habib Limited (AHL) Head of Research Tahir Abbas also said that no major changes in the budget for the stock market and budgetary framework are inline with the IMF recommendation and expectations of signing a new and bigger programme. 

Also, he added, a downward inflation trajectory and the likelihood of a further rate cut are keeping the market sentiment positive.


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2024-06-20

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