Shares at the Pakistan Stock Exchange (PSX) continued their upward trajectory on Friday as the KSE-100 index gained more than 800 points in intraday trade.

The benchmark KSE-100 index climbed 801.61 points, or 0.7 per cent, to stand at 114,514.78 from the last close of 113,713.17 at 12:06pm.

Finally, the index closed at 114,398.69, up by 685.52 points or 0.6pc, from the previous close.

Yousuf M. Farooq, director research at Chase Securities, said, “The market is upbeat following media reports that the government has convinced banks to lend Rs1.25 trillion at an interest rate of less than 11pc to clear circular debt.”

According to a report by Arif Habib Limited, the government made major strides in resolving the power sector’s circular debt of Rs1.5tr.

“As per the news, Rs1.25tr of the total amount will be financed through new loans from banks, while Rs250 billion is already allocated in the budget,” it said, adding that the government is expected to borrow Rs1.25tr from commercial banks under this plan to resolve circular debt in the power sector.

“The commercial banks lending to the government will be at an interest rate of 0.90pc lower than the Kibor [Karachi Interbank Offered Rate],” it said. “Although the government initially sought a fixed interest rate of 7-8pc, but the agreement was not finalised at the fixed rate.”

Additionally, Farooq noted that declining global oil prices were “reshaping inflation expectations”, which drove optimism in cyclical stocks.

“All eyes are now on the IMF programme, as a smooth review could help the market break out of the consolidation phase it has been in for the past two months,” he added.

Yesterday, the stock market resumed its upward trajectory on intense anticipation of further easing monetary policy, with the benchmark index settling above 113,000.

Analysts had attributed the rally to be primarily driven by a sharp decline in internati­onal oil prices, which plu­nged to multi-year lows, which uplifted investor sentiment.

Moreover, speculation surrounding a high-level meeting on the clearance of the long-standing circular debt further fuelled optimism.