The stock market’s rise is fueled mostly by banks parking assets in domestic mutual funds

The Pakistan Stock Exchange (PSX) has been on a remarkable upward trajectory since September 2024, with the market delivering an impressive 35% return in both Pakistani Rupee and US Dollar terms. This surge is primarily attributed to a significant shift in investor sentiment, as local mutual funds – powered by inflows from banks – have injected a substantial Rs58 billion (US$207 million) into the market during this period. The influx of capital marks a notable transition from fixed income instruments to equities, reshaping the investment landscape in Pakistan.

According to a recent research report by the equity research team at Topline Securities, a Karachi-based investment bank, there are several reasons behind the market rally.