KARACHI: The stock market is expected to remain buoyant in the coming weeks, supported by optimism over corporate earnings and anticipated progress on circular debt reforms, according to brokerage firm AKD Research.
Market sentiment is also expected to remain upbeat with corporate results season in full swing and further clarity over the government’s industrial policy measures, particularly the proposed phasing out of the super tax.
During the outgoing week, the benchmark KSE-100 index gained 1,109 points, or 0.76 per cent week-on-week, to close at 146,492 points on Friday, although trading remained volatile. The index initially opened on a strong note, lifted by robust corporate results and optimism surrounding the government’s industrial policy.
Sentiment was further buoyed by Moody’s decision to upgrade Pakistan’s credit rating by one notch to Caa1 from Caa2 with a stable outlook, reflecting an improvement in external balances. However, delays in circular debt payments created pressure on E&P and OMC stocks, dragging the index by 214 points and 159 points respectively. Trading activity slowed, with average daily volumes falling 7.2 per cent week-on-week (WoW) to 606 million shares compared with 653 million shares in the prior week.
Nabeel Haroon, analyst at Topline Securities, said the market extended its positive momentum as the KSE100 index increased by 0.76 per cent WoW, largely on account of buying by mutual funds, although the pace of gains slowed towards the end of the week.
He highlighted that the upgrade in Pakistan’s credit rating by Moody’s added to investor confidence.
Similarly, Wadee Zaman, analyst at JS Research, observed that the KSE-100 index extended its bullish streak, touching a weekly high of 147,534 points before slipping back on Friday. He said the uptrend was supported by Moody’s rating action, which reflected Pakistan’s improving external position.
Zaman pointed out that Pakistan’s power sector circular debt had fallen to Rs1.6 trillion by the end of June 2025, down 33 per cent from last year’s Rs2.4 trillion, following a disbursement of Rs801 billion to power producers under the government’s clearance drive.
He added that the power division is expected to present its final proposal on debt re-profiling with Chinese independent power producers (IPPs), whose outstanding dues stand at Rs475 billion.
On the external trade front, services exports rose 9.2 per cent year-on-year in FY25 to $8.4 billion, while the finance minister warned of Rs6 trillion in annual losses from state-owned enterprises, announcing plans to privatise eight SOEs this year.
Sector-wise performance during the week showed leasing companies, textile spinning, and auto parts leading the gains with increases of 13.5 per cent, 7.7 per cent, and 6.2 per cent respectively, while woollen, jute and OMCs lost 5.7 per cent, 3.2 per cent and 2.7 per cent, respectively.
On the flow side, major selling was recorded by banks and other organisations at $9.8 million and $4.2 million respectively, whereas mutual funds absorbed much of the pressure with a net buy of $15.3 million.
On the macroeconomic and political front, the Pakistani rupee appreciated for the fourth consecutive week, closing at Rs282.06 per US dollar, up 0.14 per cent week-on-week.
Key developments included expectations of a US$1 billion third IMF tranche, an invitation by Saudi Crown Prince Mohammed bin Salman to Prime Minister Shehbaz Sharif for an investment conference, ongoing talks with China on Gwadar development, and the drafting of new petroleum rules by Ogra to resolve supply disputes.
Looking ahead, analysts believe the market’s direction will largely hinge on corporate results and concrete progress on circular debt resolution. Falling interest rates, expected inflows from multilateral lenders, and the government’s commitment to reforms are seen as key drivers in sustaining investor confidence in the coming weeks.