The Pakistan Stock Exchange (PSX) experienced a significant rally on Friday, as investor sentiment soared on the back of robust corporate earnings expectations and speculation about potential rate cuts by the State Bank of Pakistan (SBP). The benchmark KSE-100 Index soared by 1,900.59 points (1.65%), peaking at 115,106.99 during intraday trading.

The rally was largely driven by investor anticipation of upcoming earnings announcements, according to Ahsan Mehanti, CEO of Arif Habib Commodities. The SBP’s hints at possible rate reductions also played a crucial role in fueling the optimism. SBP Governor Jameel Ahmad pointed out that cooling inflation could provide the central bank with more room to ease monetary policies, further stimulating market confidence.

Despite these positive developments, concerns about the nation’s foreign exchange reserves persisted. The SBP reported a decline of $76 million in reserves, bringing the total to $11.372 billion as of January 24. This drop in reserves reflects the ongoing pressure of external debt repayments. The overall foreign exchange reserves also fell by $137 million, continuing to strain Pakistan’s financial stability.

Analysts are cautiously optimistic about the market’s future, predicting continued volatility as investors monitor upcoming corporate earnings reports and key macroeconomic developments, particularly the state of the country’s reserves and inflation trends.