March 2025 saw a strong performance on Pakistan’s local bourse as the benchmark KSE 100 index surged to an all-time high of 119,421.81 points, marking a significant achievement for the Pakistan Stock Exchange (PSX). The surge was largely driven by positive economic news, particularly the $1 billion IMF staff-level agreement under the Extended Fund Facility (EFF), which bolstered investor confidence. Additionally, the announcement of a $1.3 billion Resilience and Sustainability Facility (RSF) arrangement provided further momentum, encouraging continued interest in the market.
Another factor that kept investor sentiment optimistic was the expectation of progress on resolving Pakistan’s circular debt, a critical issue that has plagued the country’s economy for years. These positive signals helped fuel the market rally, despite some intermittent concerns during the month. Notably, the KSE 100 index dipped to a low of 115,883.22 at one point, as investors took profits in reaction to news flows surrounding cement royalties in Khyber Pakhtunkhwa (KPK) and IMF updates. However, by the end of the month, the index had rebounded, closing at 117,806.74 points, up by 4,555 points, or 4%, compared to the previous month’s close of 113,251.66.
The market capitalization of the KSE-100 stood at Rs 3.55 trillion, showing a 2% increase from the prior month’s Rs 3.48 trillion. In USD terms, the market cap was valued at $12.67 billion, reflecting a 1.8% month-on-month increase. Compared to the same month last year, the market capitalization saw a significant rise of 64.30%, emphasizing the growing strength of the market. Additionally, the index return in USD terms turned positive, reaching 3.83%, reversing the previous month’s decline of -1.13%.
On the macroeconomic front, Pakistan’s Consumer Price Index (CPI) slowed to 0.7% in March 2025, a significant drop from 1.5% in February 2025 and a drastic reduction from 20.68% in March 2024. This easing in inflation provided a positive economic signal, helping to stabilize investor sentiment. Meanwhile, the country’s trade deficit widened by 33.43% year-on-year to $2.3 billion in February 2025, up from $1.72 billion during the same period last year. Cotton arrivals also fell sharply by 34%, reaching 5.5 million bales, compared to 8.4 million bales in February 2024.
Despite these challenges, the overall economic outlook remained positive. The State Bank of Pakistan (SBP) maintained the policy rate at 12% while successfully meeting the IMF’s Net International Reserves (NIR) target for December 2024, reinforcing investor confidence. Additionally, workers’ remittances surged to $3.1 billion in February 2025, reflecting a 38.6% year-on-year increase.
The growth in car sales, which rose by 24.5% to 12,084 units in February 2025, along with a slight increase in foreign direct investment (FDI) to $94.7 million, further supported the positive economic momentum. On the downside, the country’s foreign exchange reserves declined by $540 million to $10.61 billion by March 21, 2025.
Amid these mixed signals, the market’s fiscal year-to-date returns remained strong, with a notable 50.17% increase, while the calendar year-to-date (CYTD) return stood at 2.32%. The performance of key sectors during the month was mixed, with Oil & Gas Exploration Companies, Oil & Gas Marketing Companies, Commercial Banks, and Power Generation & Distribution contributing positively to the index. On the flip side, sectors like Fertilizer, Leather & Tanneries, and Investment Banks detracted from the index.
Notable individual stock performances included MARI, which added 1,072.44 points to the index, while HUBC, PSO, and OGDC contributed significantly as well. In contrast, FFC, SRVI, and ENGROH lost ground, shedding 189.05, 160.66, and 154.1 points, respectively.
Foreign investors emerged as net sellers in March, offloading equities worth $11.97 million. Foreign corporations were the largest sellers, with a net sale of $14.09 million. However, local investors remained optimistic, with local institutional and retail investors purchasing equities worth $11.97 million. The net buying activity by local investors demonstrated the market’s resilience despite the volatility.
In conclusion, the performance of the KSE-100 index in March 2025 was largely driven by positive economic developments, including international financial support and a steadying inflation rate. Although the market experienced some turbulence due to concerns over sector-specific issues, the overall sentiment remained bullish, reflecting the growing confidence in Pakistan’s economic recovery and long-term growth potential. As the country continues to navigate these challenges, the PSX’s strong performance in March provides a hopeful outlook for the months ahead.