Investor sentiment received a significant boost on Tuesday as the Pakistan Stock Exchange (PSX) surged to a record high, with the benchmark KSE-100 Index closing at 120,450.87 points, up 1.32% from the previous session. The rally was driven by growing optimism ahead of the federal budget, with market participants reacting positively to speculation about tax reforms, ongoing IMF negotiations, and development spending plans. Analysts attributed the bullish trend to expectations of relief for the salaried class, as reports suggest the IMF may approve lower income tax rates, potentially reducing the burden on lower-income brackets while maintaining the overall revenue target through compensatory measures.
The market’s upward momentum was further supported by the approval of a Rs4.083 trillion national development outlay for the next fiscal year, signaling the government’s commitment to growth despite IMF-imposed constraints. While 118 projects were removed from the Public Sector Development Programme (PSDP), Rs50 billion was allocated for parliamentarians’ development initiatives under the SDGs Achievement Program. The Annual Plan Coordination Committee (APCC) also endorsed key macroeconomic targets, including 4.2% GDP growth and 7.5% inflation, pending final approval from the National Economic Council (NEC). The rally marked a sharp rebound from Monday’s decline, underscoring the market’s sensitivity to budget-related developments and its anticipation of favorable fiscal policies.