Pakistani markets are making a strong comeback after losing ground over the past weeks. The string of losses were severe to the extent that a delegation from the Pakistan Stock Exchange (PSX) went and met with Prime Minister Shahid Khaqan Abbasi to discuss the possibility of Rs 20-25 billion bailout package by the government for the stock market alongside some tax relief.

Since then, the markets have rebounded; during the outgoing week KSE-100 managed to close over 42,000 level after a fortnight. Experts are attributing this recovery to the rumors of an impending bailout package – there was no statement by the Prime Minister or his representatives after the meeting with the PSX – a result of government policies to end the trade deficit and better ties with the US. It must be noted however, that after this remarkably quick recovery questions are being raised about the role of traders in engineering this situation.

This episode shows how fickle the stock market really is, especially when used as a barometer of economic health. While the ups and downs of the index can be used a support arguments about specific policy changes, using it as a definite marker of success or failure is inaccurate at best. A few weeks ago politicians and commentators were prophetically using the poor health of the markets as a damning indicator of our failing economy, today those arguments are unfounded.

Similarly the government is using the recovery as an exoneration of its economic policies and management, on arguments equally tenuous as the previous ones. Admittedly the meetings with the Prime Minister and macro-economic polices sparked the resurgence, but that does not mean these policies are objectively justified.

Drawing concrete inference from fleeting market trends is rarely accurate, we have to wait and see if the trends hold.