KARACHI: The Pakistan Stock Exchange (PSX) is expected to maintain its positive momentum in the coming week, driven by corporate earnings announcements, developments surrounding the resolution of circular debt and continued economic stability.
Analysts foresee the KSE-100 index extending gains with AKD Research projecting the benchmark index to achieve 165,215 points by December 2025, underpinned by strong earnings from fertiliser companies, strong returns on equity in the banking sector and improved cash flows for exploration and production firms as well as oil marketing companies. Declining interest rates and improved macroeconomic indicators are also seen as catalysts for sustaining the bullish sentiment.
The outgoing week was marked by both strength and volatility. The KSE-100 index touched a record intraday high of 151,262 points mid-week, before settling at 149,493 points, reflecting a week-on-week gain of 3,001 points or 2.0 per cent. This momentum was supported by a surge in commercial banks, which contributed 1,626 points after Moody’s upgraded deposit ratings for Pakistani banks.
According to Abdul Basit at JS Research, the index’s strong performance was driven by resilient buying interest, with average daily trading volume climbing to 790 million shares compared to 606 million shares in the prior week. Similarly, the average daily traded value rose by 11 per cent to Rs44.9 billion.
Nabeel Haroon, an analyst at Topline Securities, noted that mutual funds were the leading buyers, recording net inflows of $55.5 million by the close of the week. This was in sharp contrast to net selling by foreigners and banks/DFIs of $14 million and $7.6 million, respectively.
Mutual funds and local companies absorbed the selling pressure with net buys of $14.8 million and $9.9 million. Market participation grew significantly, with overall volumes rising 31 per cent week-on-week (WoW).
On the macroeconomic side, Pakistan’s current account deficit narrowed to $254 million in July 2025 from $348 million in the same month last year, while IT exports rose 24 per cent year-on-year (YoY) to $354 million. The LSM index grew 4.1 per cent in June 2025, though overall FY25 posted a contraction of 0.7 per cent. Foreign direct investment (FDI) rose 7.0 per cent YoY to $208 million in July. Cumulative Roshan Digital Account inflows reached $10.75 billion, reflecting stable remittance-linked flows. Meanwhile, the State Bank of Pakistan’s reserves increased marginally by $13 million to $14.3 billion. The rupee extended its appreciation streak for the fifth consecutive week, closing at Rs281.9 against the dollar.
Sector performance varied, with REITs, leather and tanneries, and transport among the top performers, gaining 8.2 per cent, 8.0 per cent, and 7.3 per cent, respectively. In contrast, vanaspati and allied industries, close-end mutual funds, and chemicals lost 4.2 per cent, 2.3 per cent, and 2.2 per cent.
Notable news flow included the Asian Development Bank approving a $410 million package for the Reko Diq mining project, Chinese Foreign Minister Wang Yi’s visit to Islamabad, and the government reducing high-speed diesel prices by Rs12.84 per litre while keeping petrol unchanged.
Looking ahead, the PSX is likely to remain buoyant, with investors eyeing further clarity on energy sector reforms and circular debt settlement, alongside corporate earnings momentum.
Analysts suggest that sustained foreign inflows, stable currency movement, and declining inflation could provide additional support, though political developments may introduce short-term volatility.