Moaaz Manzoor

The Pakistan Stock Exchange (PSX) ended the week on a firm note as investor sentiment improved following progress on IMF inflows, a relatively stable rupee, and easing geopolitical concerns. The benchmark KSE-100 Index closed at 163,806 points, gaining 708 points or 0.4 percent week-on-week (WoW) amid strong volumes and rising optimism over economic stability.

Trading activity showed renewed investor participation, with average volumes surging 34.5 percent WoW to 1,826 million shares, while the average traded value edged up 1.4 percent WoW to USD198 million. Analysts attributed the positive momentum to progress on Pakistan’s USD7 billion Extended Fund Facility (EFF) and USD1.3 billion Resilience and Sustainability Facility (RSF), after the country reached a Staff-Level Agreement (SLA) with the International Monetary Fund (IMF) during the week.

Once approved by the IMF’s Executive Board, the agreement is expected to unlock USD1 billion under the EFF and an additional USD200 million (SDR154 million) under the RSF, bolstering external financing and investor confidence. On the macroeconomic front, the State Bank of Pakistan’s (SBP) reserves inched up to USD14.44 billion, reflecting a USD20.7 million increase on a weekly basis. The Pakistani rupee remained stable at 281.10 per US dollar, supported by steady remittance inflows and contained import demand.

However, external accounts showed some pressure. The Pakistan Bureau of Statistics (PBS) reported a trade deficit of USD3.4 billion in September 2025, widening 33.8 percent year-on-year (YoY) to USD9.4 billion in 1QFY26. On a positive note, refinery upliftment excluding furnace oil surged 21.6 percent YoY in September, led by a 32.1 percent rise in high-speed diesel demand, reflecting an uptick in domestic economic activity and lower Iranian inflows.

Oil production also increased 1.3 percent WoW to 65,301 barrels per day, driven by higher output from the Sharf, Pasakhi, and Makori East fields. In the debt market, the government raised PKR506.7 billion in the PIB auction against a PKR450 billion target and PKR775.9 billion in the T-Bill auction versus a PKR750 billion target, indicating robust investor participation and stable yields.

According to Arif Habib Limited, the banking sector contributed the most to the KSE-100’s weekly gains with 904 points, followed by power (204 points), technology (108 points), miscellaneous (84 points), and cement (69 points) sectors. Top scrip-wise gainers included UBL (321 points), HUBC (208 points), BOP (174 points), LUCK (170 points), and MEBL (132 points). Conversely, fertilizer, E&P, and OMC sectors weighed on the index.

In its weekly report, AKD Securities Limited said the market’s upward trajectory was supported by the IMF staff-level agreement, improved credit outlook, and lower fixed-income yields. “Investor sentiment is expected to further improve on the likelihood of foreign portfolio and direct investment inflows, particularly with improved relations with the US and KSA,” it stated, highlighting the KSE-100’s attractive valuation at 7.3x earnings and a 6.7 percent dividend yield.

Ali Najib, Deputy Head of Trading at Arif Habib Limited, observed that the market experienced bouts of volatility before stabilizing toward the week’s close. “Participants remained cautious amid persistent inflationary pressures, while the upcoming monetary policy meeting is likely to maintain a status quo stance,” he said.

Meanwhile, Syed Zafar Abbas, Manager at Zahid Latif Khan Securities, noted that the PSX remained volatile throughout the week. “The index touched an all-time high of around 169,000 points before closing near 164,000,” he said, adding that “the market appears to be entering a correction phase amid inflation concerns and border tensions. A rate cut at this stage would come as a major surprise.”

Credit: INP-WealthPk