Karachi, May 31, 2025 – The benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) posted a strong performance in May 2025, gaining 7.5% on a month-on-month (MoM) basis, according to a report by Topline Securities Limited.
This upward movement marks a significant recovery for the index, driven by favorable economic signals and key policy decisions.
The rally in the KSE-100 during May was primarily fueled by the State Bank of Pakistan’s (SBP) decision to cut the policy rate by 100 basis points, bringing it down to 11%. This monetary easing came in response to improved inflation expectations and was seen as a major boost for investor sentiment across the equity market.
In addition to the rate cut, investor confidence was further reinforced by the approval of the first review of Pakistan’s Extended Fund Facility (EFF) by the International Monetary Fund (IMF). The IMF also endorsed a new Resilience and Sustainability Facility worth $1.4 billion, which helped ease external financing concerns and added momentum to the index throughout May.
Several other economic indicators influenced the movement of the KSE-100 index during the month. The Consumer Price Index (CPI) for April 2025 dropped to 0.3%, compared to 0.7% in March, indicating easing inflationary pressures. Meanwhile, car sales in April were reported at 10,596 units—reflecting a 5% MoM decline but a slight 1% increase year-on-year. The decline was largely attributed to supply chain disruptions caused by highway closures.
Trade data also showed a mixed picture. Pakistan’s trade deficit widened to $3.39 billion in April 2025, the highest in three years, representing a 55% MoM increase. However, the current account remained in surplus for the same period, posting $12 million in April and taking the cumulative 10-month fiscal year surplus to $1.88 billion, thanks to robust remittance inflows totaling $3.2 billion—up 13% YoY.
The KSE-100 index benefitted from this combination of macroeconomic trends, monetary policy actions, and international financial backing. Trading activity remained robust, with an average daily volume of 566 million shares and a value of Rs28 billion.
As May closes with a strong rally, market analysts remain cautiously optimistic about the near-term trajectory of the KSE-100 index, citing improved investor sentiment and macroeconomic stability as key drivers moving forward.