Stocks rallied on Wednesday, erasing almost all of the previous session’s sharp losses as political tensions eased after the Pakistan Tehreek-e-Insaf (PTI) decided to “shift” its three-day protest in Islamabad. Restored with
The rally signaled a dramatic turnaround in investor sentiment, with the Pakistan Stock Exchange (PSX) roaring back to life amid renewed confidence and easing fears of prolonged volatility.
The benchmark KSE-100 shares index of the Pakistan Stock Exchange (PSX) rose 3,740.84 points or 3.96 percent to 98,315.19 points in intraday trade, higher than the previous close of 94,574.16 points.
The market crashed more than 3,500 points after a PTI march on Islamabad turned violent on Tuesday, according to government officials, as angry protesters clashed with police and resulted in at least three deaths. Rangers and two policemen were martyred.
Meanwhile, the PTI has claimed that eight of its members lost their lives.
Topline Securities CEO Muhammad Sohail explained the rapid recovery, saying: “The market has completely returned to normal as with reports confirming the end of the protests, investors who were selling yesterday were, are now in buying mode.”
“Within 10 minutes of trading, the index rallied, recouping the market’s losses of around Rs 450-500 billion on Tuesday,” he added.
Extending cautious optimism, Sohail said it would take a few more days for the market to fully stabilize, as investors were walking on eggshells to rebuild their positions after Tuesday’s tailspin.
“According to our report, we expect the market to reach 127,000 points next year.”
While predicting when the market will cross the 100,000 mark remains a challenge, the top line executive said the milestone is likely to be achieved this month or next month, given current trends.
The rally came in response to the PTI’s announcement of a temporary end to its “do or die” protest, which had paralyzed the federal capital since November 24.
The suspension followed a crackdown by law enforcement agencies, which dispersed protesters from Islamabad’s red zone.
In a press release by its central media cell, the PTI said: “In light of the government’s brutality and plans to turn the federal capital into a “killing ground” for unarmed citizens, we temporarily call off our peaceful protest. Announcing the suspension.
The party further said that after consulting Imran Khan, the future course of action will be announced.
The easing of political unrest spurred a relief rally as investors, previously wary of prolonged volatility, regained confidence and re-entered the market.
Muhammad Saad Ali, director of research at Intermarket Securities, attributed the market performance to improved investor sentiment: “The market is taking a relief rally today, following the news that the PTI protests have been stopped by the government. “Almost completely.”
“Banks are also supporting the rally,” he added. “Removal of MDR on non-individual deposits yesterday is a huge positive for large conventional banks – which could support their earnings and payouts in 2025 amid falling interest rates.”
The banking sector rally benefited from the State Bank of Pakistan’s (SBP) removal of the minimum rate of return (MPR) requirement on deposits from financial institutions, public sector enterprises, and public limited companies. Emerged.
The decision, announced on Tuesday, has strengthened conventional banks by reducing the burden of mandatory deposit reserves and improving profitability.
Earlier, commercial banks were required to pay a minimum rate of return on all savings deposits linked to the SBP repo rate. Removing this requirement would lead to a change in banking policy, aimed at facilitating large depositors and encouraging fairer banking practices.
Analysts predict that the removal of the MPR will boost big banks’ earnings and payouts in 2025, especially with lower interest rates.
Additionally, withdrawal of arbitrarily imposed charges on large accounts with deposits of more than Rs 1 billion has provided further relief to depositors.
The State Bank’s decision is in line with its efforts to promote transparency and protect the interests of both banks and depositors.
By relaxing these requirements, the central bank aims to create a more balanced and competitive banking environment.
This is a developing story and will be updated with more details.