KARACHI: The Pakistan Stock Exchange (PSX) concluded the week on a positive note, with the KSE-100 index closing at 113,252 points, marking a 0.40% week-on-week (WoW) increase of 451 points.
Investor confidence remained strong, supported by enhanced market liquidity and optimism over discussions regarding an additional $1 billion in climate financing under the International Monetary Fund’s (IMF) $7 billion Extended Fund Facility (EFF).
A significant development during the week was the signing of a memorandum of understanding (MoU) between Pakistan and Iran to expand bilateral trade to $10 billion. However, investors remained cautious, closely monitoring potential corporate and provincial tax reforms in anticipation of the IMF’s upcoming budget review for FY26.
The week began with a bullish trend, as a pre-budget rally propelled the KSE-100 index up by 1,529 points. This surge followed remarks by the finance minister on rising workers’ remittances, improved foreign exchange reserves, lower inflation, and government support for the construction sector.
On Tuesday, the index saw a moderate increase of 198 points, reaching a peak of 115,890 points before settling at 114,528. Positive sentiment was driven by strong corporate earnings, expectations of reduced industrial power tariffs, low inflation, possible privatization of state-owned enterprises (SOEs), and the upcoming IMF review.
Midweek, the market experienced volatility as profit-taking interrupted the rally, leading to a 666-point decline. Following consecutive sessions of strong buying by local mutual funds, investors opted to secure profits, causing fluctuations throughout the day.
On Thursday, the market remained range-bound, closing 78 points lower as traders awaited key market-moving catalysts. Despite starting the day on a positive note, investors continued profit-taking in select sectors.
The final trading session of the week saw a significant decline of 533 points due to market consolidation and inflation concerns.
Arif Habib Limited (AHL) highlighted in its weekly report that improved local liquidity and positive sentiment surrounding climate financing discussions contributed to the market’s overall gains. However, investors exercised caution ahead of potential tax reforms and the IMF’s budget review.
In macroeconomic developments, the State Bank of Pakistan’s foreign exchange reserves increased by $21 million, reaching $11.22 billion, while the Pakistani rupee depreciated slightly by 0.04% to 279.57 against the US dollar.
Sector-wise, commercial banks (510 points), glass & ceramics (83 points), power generation (78 points), exploration & production (68 points), and food (47 points) made positive contributions. Leading stocks driving the market upward included OGDC (206 points), MCB Bank (203 points), Bank AL Habib (176 points), Meezan Bank (106 points), and Maple Leaf Cement (95 points).
Foreign investors remained net sellers, offloading $6 million worth of shares compared to $5.1 million in the previous week, according to AHL.
JS Global analyst Muhammad Waqas Ghani noted that the KSE-100 index remained positive throughout the week. He projected that following a 2.4% inflation reading in January, the Consumer Price Index (CPI) could drop to 2.3% in February, marking a nine-year low and reinforcing Pakistan’s ongoing disinflationary trend.
“Given the rapid decline in inflation, we estimate the CPI for FY25 to average 5.7%. However, food inflation may rise during Ramazan,” he stated. He also pointed out that the Finance Division expects inflation to increase slightly in March, reaching around 3-4%.
Despite external debt repayments, central bank reserves remained steady at $11.22 billion, providing stability to the market.
