In March 2025, the Pakistan Stock Exchange (PSX) experienced a notable upturn, marking its first positive month after two consecutive bearish periods. This resurgence was primarily driven by the Staff-Level Agreement (SLA) reached with the International Monetary Fund (IMF), which bolstered investor confidence by signaling potential inflows of much-needed foreign exchange to support the nation's economy.
The benchmark KSE-100 index commenced March at 113,499 points, reaching an intra-month high of 119,422 and a low of 111,717. By month's end, it closed at 117,807 points, reflecting a 4.02% increase. This positive trajectory was influenced by several factors, including advancements in resolving circular debt and governmental initiatives aimed at reducing electricity prices.
Investor optimism was evident as the market responded favorably to the SLA with the IMF. The agreement, part of a $7 billion Extended Fund Facility, is anticipated to release a $1.1 billion tranche, providing critical support for Pakistan's external debt obligations and economic stabilization efforts. Additionally, a new 28-month, $1.3 billion arrangement under the Resilience and Sustainability Facility (RSF) was established, further enhancing economic prospects.
Pakistan's economy showed signs of modest growth, with a 1.73% year-on-year increase in GDP during the second quarter of FY25, and a cumulative 1.54% growth in the first half of FY25 compared to 2.33% in the same period the previous year. Despite these gains, the State Bank of Pakistan's foreign exchange reserves declined by $540 million, reaching a six-month low of $10.6 billion.
Looking ahead, market analysts anticipate continued positive momentum, supported by expectations of low inflation rates. The Consumer Price Index (CPI) for the upcoming period is projected to be 0.79%, the lowest in six decades, which may further bolster investor confidence and market performance.
As Pakistan navigates its economic challenges, the successful implementation of IMF agreements and structural reforms will be pivotal in sustaining market stability and fostering long-term growth.