KARACHI: The Pakistan Stock Exchange (PSX) witnessed a powerful rally during the outgoing week, with the benchmark KSE-100 index soaring by 4,297 points to close at 138,597, marking a 3.2 per cent week-on-week (WoW) gain.
Despite a decline in trading activity, the market’s upward momentum was fuelled by strong macroeconomic indicators, improved investor sentiment, and the International Monetary Fund’s (IMF) nod of approval for Pakistan’s ongoing structural reforms.
Going into next week, analysts expect the bullish tone to continue, backed by growing confidence in economic stability, prospects of further monetary easing and anticipation surrounding major privatisation moves.
According to Abdul Basit, an analyst at JS Research, the sharp WoW gain was largely driven by heavyweight performances from Fauji Fertilizer Company (FFC), which contributed 1,821 points to the index, and United Bank Limited (UBL), which added 1,165 points. The rally came despite a 20 per cent WoW drop in average daily turnover (ADTO), reflecting more targeted and selective investor activity.
One of the week’s standout developments was the current account data for June 2025, which showed a surplus of $328 million. This brought the total current account surplus for FY25 to $2.1 billion, the first annual surplus in 14 years, compared to a deficit of $2.07 billion in FY24. The improvement was largely driven by record-high remittances of US$38.3 billion, which rose 27 per cent year-on-year (YoY), underlining the resilience of Pakistan’s overseas workforce and the effectiveness of formal remittance channels.
Sentiment was further supported by the IMF’s expression of satisfaction with Pakistan’s economic progress, particularly its commitment to structural reforms. This endorsement boosted investor confidence in the government’s policy direction and reform agenda.
Nabeel Haroon, an analyst at Topline Securities, echoed the positive outlook, noting that continued institutional buying, particularly by local mutual funds, played a key role in maintaining market momentum.
He also pointed to encouraging fixed income market signals. In the Pakistan Investment Bond (PIB) auction held during the week, the government raised Rs342 billion against a target of Rs300 billion, with yields falling between 30 and 54 basis points (bps) across tenors, reflecting easing inflation expectations and improved liquidity conditions.
Other notable macroeconomic indicators released during the week included foreign direct investment (FDI) data, which showed inflows of $207 million for June 2025, slightly lower than May’s $217 million.
On the industrial front, the Pakistan Bureau of Statistics (PBS) reported that the Large-Scale Manufacturing (LSM) index grew by 2.3 per cent YoY in May 2025. However, cumulative LSM activity for the first 11 months of FY25 remained 1.2 per cent lower YoY, indicating a still-recovering industrial sector.
Auto sector indicators continued to show strength. Auto financing rose 20 per cent YoY in June 2025, reaching Rs277 billion, signalling a rise in consumer confidence and demand in the automotive segment.
In terms of external obligations, Pakistan faces over $23 billion in external debt repayments during FY26. However, the government expects a portion of these to be rolled over by friendly countries, easing immediate pressure on foreign exchange reserves. Meanwhile, the State Bank of Pakistan’s reserves remained stable at $14.5 billion during the week.
Privatisation efforts also gained traction. The government aims to finalise the privatisation of Pakistan International Airlines (PIA) within the next two to three months. Additionally, expressions of interest (EOIs) for the Roosevelt Hotel in New York are expected to be invited in August, as authorities seek to generate revenue through strategic asset sales. Average daily trading volume and value during the week stood at 763 million shares and Rs35.89 billion ($126 million), respectively.
Looking ahead, market participants anticipate sustained investor interest supported by the strong current account position, potential monetary policy easing, and acceleration of privatisation. However, attention will remain focused on foreign funding arrangements, political stability, and global commodity price trends, particularly in oil, which could influence future market direction.