Bulls dominated the trade floor at the Pakistan Stock Exchange (PSX) as shares reached an all-time high, nearing the barrier of 118,000 points.

The benchmark KSE-100 index climbed 972.93 points, or 0.83 per cent, to stand at 117,974.02 from the last close of 117,001.09 points.

Mohammed Sohail, chief executive of Topline Securities, attributed the bull run to “expectations that government will agree with banks to resolve old circular debt issues that will help listed energy companies”.

The government last week announced it had reached an agreement with banks to extend PHL, a state-owned entity, Rs1.25 trillion in financing at a favourable floating interest rate of Kibor minus 0.90pc per annum.

The move was described as part of a broad strategy to eliminate the circular debt that has plagued Pakistan’s power sector, which has been fuelled by unpaid bills, theft, and distribution losses that have continued to accumulate over the past decade.

The circular debt crisis is one of the most contentious issues in Pakistan’s negotiations with the International Monetary Fund (IMF). While the government aims to retire Rs1.5tr of circular debt through Rs1.25tr in new borrowing and Rs250bn in budget support, it does little to address the underlying issues fuelling the debt buildup.

Sana Tawfik, head of research at Arif Habib Limited, noted that the positive momentum was continuing from last week.

“Secondly, volume levels have improved since Ramazan’s first week — that is, buying activity is visible,” she said. “On the economic front, there has been significant progress made regarding the IMF deal.

“Moreover, news regarding the circular debt shows that there are steps being taken,” she highlighted.

Awais Ashraf, director research at AKD Securities, echoed the same sentiments.

He said: “Optimism over successful review of IMF first review along with expected disbursement of additional inflows under climate programme has helped investors sentiment to remain positive.

“Resolution of circular debt has kept energy chain in radar while Hub power gains the most as it’s partner in EV BYD reveals super fast charger,” he noted.

Topline Securities, a brokerage firm, observed that the index “hit a record high of 117,974 points, rising by 973 points (0.83pc).

“The market continued its upward momentum, fuelled by strong buying activity from local institutions, peaking at 118,244 points during the day,” it said.

“The rally was primarily driven by HUBC, MARI, ENGROH, SYS, and PPL, which together contributed 551 points to the index,” it highlighted, adding overall 543 million shares were traded, with a turnover of Rs32 billion.

According to news reports, the IMF has permitted Pakistan to borrow Rs1.25tr ($4.5bn) from domestic banks to help manage the Rs2.4tr circular debt in the power sector without increasing public debt.

The investor confidence was further lifted as the IMF shared a draft of the Memorandum of Economic and Financial Policies (MEFP) with Pakistani authorities, marking progress toward a Staff-Level Agreement under the $7bn Extended Fund Facility (EFF). This reinforced hopes for sustained financial support and economic stability.

Yesterday, the stock market extended its bullish spell to a fourth straight session, helping the benchmark KSE-100 index breach another barrier of 117,000 thanks to optimism related to the IMF’s positive review of the economy.