Pakistan Stock Exchange (PSX) closed the first week of the new year and the second week in a row on a positive note, with the benchmark KSE-100 Index gaining 2,063.85 points (+3.3 percent) to close at 64,514.89 points. The optimism remained high as the International Monetary Fund (IMF) executive board is scheduled to meet on January 11 (Thursday) and is expected to approve $700 million for the country. Moreover, a substantial increase in the Federal Board of Revenue’s (FBR) tax collection, continuous growth in the State Bank of Pakistan’s (SBP) foreign currency reserves, substantial fall in the country’s trade deficit and a stable rupee provided critical support to the stock market. However, the elevated headline inflation at 29.7 percent raised some concerns. Moreover, news of the Senate approving a resolution seeking delay in the general elections took a toll on investor sentiment. However, most of the political parties as well as the caretaker government showed dismay over the resolution, assuring commitment to timely elections. The development, which comes just a little over a month before the general elections scheduled for February 8, raised concerns of growing political instability in the country, which remains already engulfed in a myriad of challenges. According to a note by AKD Securities, the economic indicators, however, remained positive throughout the week. The State Bank of Pakistan (SBP) reported a 23-week high in its foreign exchange reserves, which rose by $1.3 billion in the last two weeks of December 2023. The reserves stood at $8.22 billion as of December 29, 2023, and are expected to increase further with the anticipated $700 million second tranche from the IMF. The exports also reached an 18-month high of $2.8 billion in December 2023, reducing the trade deficit by 40 percent year-on-year. The current account deficit also remained under control. The Pakistani rupee also appreciated by 0.16 percent week-on-week against the US dollar, closing at Rs281.4 at the end of the week. Similarly, Pakistan’s dollar bonds gained 93 percent in 2023, outperforming most of the emerging markets. The market participation also improved slightly, with the average daily traded volumes rising by 5.4 percent week-on-week to 687 million shares, while the average value traded settled at $69.6 million, up by 11.6 percent week-on-week. Foreigner selling was witnessed during the week, clocking in at $3.1 million compared to a net sell of $1.9 million last week. Major selling was witnessed in E&P ($1.95 million) and banks ($1 million). On the local front, buying was reported by other organizations ($5.5 million) followed by banks ($5.4 million). Sector-wise positive contributions came from oil and gas exploration companies (587 points), commercial banks (392 points), fertilizer (315 points), cement (185 points), and power generation and distribution (166 points). Scrip-wise positive contributors were PPL (268 points), OGDC (258 points), FFC (151 points), HUBC (120 points), and UBL (102 points). The sectors which mainly contributed negatively were miscellaneous (13 points), glass and ceramics (3.2 points), investment banks (1.3 points), modarbas (1 points), and leasing companies (0.1 points). Meanwhile, scrip-wise negative contributions came from PABC (12 points), AKBL (6 points), GHGL (4.8 points), LCI (4.5 points), and BIPL (3.6 points). According to market experts, the outlook for the next week is bullish, as the market expects the disbursement of the IMF’s second tranche, which would boost the foreign exchange reserves and the confidence of the investors. The upcoming elections, however, could pose a challenge for the market, as the political situation remains volatile.