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Cautious optimism persists at PSX as macro indicators offer modest support

July 31, 2025

Moaaz Manzoor

Cautious optimism continued to shape investor sentiment at the Pakistan Stock Exchange (PSX), as macro indicators offered just enough support to keep hopes afloat but not enough thrust to break a crucial psychological ceiling.

The Monday benchmark index’s dance around the 140,000 mark told a story of a market eager to rally but held back by lingering uncertainty. Speaking to WealthPK, Ali Najib, Deputy Head of Trading at Arif Habib Ltd (AHL), remarked, “140k – a hard nut to crack!” He noted that despite early momentum pushing the index to an intraday high of 140,149 points (up 942 points or 0.68%), it failed once again to sustain gains and closed the session at 139,380 points (up 173 points or 0.12%).

This pattern, according to Najib, signals the presence of selling pressure at higher levels, dampening investor efforts to establish a breakout. He pointed out, “The buying spree has proved a short-lived phenomenon as the market succumbed to selling headwinds.” The day’s gains were driven mainly by stocks such as LUCK, SYS, FATIMA, PSO, and SAZEW, which collectively contributed 379 points to the index.

However, this upward momentum was nearly wiped out by a 384-point dip from banking sector blue-chips like UBL, MEBL, BAFL, HBL, and MCB. According to Najib, this selling likely reflects street expectations of a 50bps policy rate cut in the upcoming Monetary Policy Meeting, scheduled for July 30, as indicated in an internal AHL survey.

Trading activity showed mild fatigue, with over 587.5 million shares changing hands, and total turnover recorded at Rs34.5 billion. Amreli Steels Ltd (ASL) led the volume chart with 51.8 million shares traded. Market watchers note that 137,000 remains a key support level for the KSE-100 Index. A dip below this threshold could pull the index down to 135,000, but attractive valuations and anticipated monetary easing may lure investors back in at those levels.

Muhammad Bilal Ejaz, Research Analyst at Ismail Iqbal Securities, explained the market's cautiously bullish tone, stating, “The PSX rally reflects some improving fundamentals.” He added that with inflation easing and expectations of rate cuts re-emerging, the KSE-100’s trailing P/E ratio has now crossed 7 — edging closer to the long-term average of 8. Yet, he cautioned, “It remains sensitive to fiscal and external risks.”

Credit: INP-WealthPk