Karachi: The KSE-100 Index surged to a historic high this week, closing at 121,641 points, driven by optimistic sentiments regarding a potential agreement with the International Monetary Fund (IMF) as indicated by the Prime Minister. The index climbed by 1.6% on a week-on-week basis, although average trading volumes saw a slight dip of 0.2% to 660 million shares.

The rally in the stock market coincided with positive developments on the economic front. The Consumer Price Index (CPI) for May 2025 registered a year-on-year increase of 3.5%, primarily due to the dissipating base effect. This resulted in an average inflation rate of 4.61% for the first eleven months of the fiscal year 2025. Additionally, the trade deficit for May narrowed by 23% month-on-month to $2.6 billion.

In terms of external support, the Asian Development Bank (ADB) announced up to $800 million in support for fiscal reforms. The government also unveiled its macroeconomic targets for the fiscal year 2026, projecting a GDP growth of 4.2% and average inflation of 7.5%.

However, challenges remain, as the Federal Board of Revenue (FBR) fell short of its tax collection target by Rs1 trillion in the first eleven months of FY25, collecting Rs10.2 trillion against a target of Rs11.2 trillion.

Meanwhile, the government finalized a Rs1.275 trillion financing agreement with 18 commercial banks to address the power sector's circular debt, following the endorsement of the IMF.

On the sectoral front, local cement dispatches increased by 9% year-on-year in May 2025, leading to nearly flat volumes for the eleven-month period of FY25. A 26% rise in exports during the same period contributed to a 2% growth in total cement dispatches.