KARACHI: The Pakistan Stock Exchange (PSX) closed the week on a volatile note, but analysts expect the market to maintain a positive trajectory in the coming weeks, supported by corporate earnings season and anticipated progress on the circular debt issue.
According to AKD Research, the KSE-100 index is projected to sustain its upward momentum, driven by strong earnings in the fertiliser sector, consistent returns on equity in banks, and improving cash flows in exploration and production (E&P) companies and oil marketing companies (OMCs). Falling interest rates and a relatively stable macroeconomic environment are also expected to aid this upward trend, keeping investors’ sentiment constructive in the near term.
During the outgoing week, however, the KSE-100 index witnessed turbulence, primarily due to widespread flooding in Khyber Pakhtunkhwa and Punjab, alongside heightened political noise. The benchmark index shed 870 points, or 0.59 per cent week-on-week, to close at 148,617 points. Nonetheless, Friday’s session saw a strong rebound of 1,274 points on the back of robust corporate earnings, particularly from the cement sector.
Trading activity improved, with average daily traded volume rising by 13.7 per cent to 899 million shares compared to 790 million shares in the previous week.
On the macroeconomic front, the State Bank of Pakistan’s (SBP) profit declined by 27 per cent year-on-year (YoY) in FY25 to Rs2.5 trillion due to reduced interest income, although its dividend payout to the federal government rose sharply by 2.8 times to Rs2.7 trillion. SBP’s gold reserves climbed to $6.8 billion, up 41 per cent YoY, while its foreign exchange reserves increased slightly by $18 million week-on-week (WoW) to stand at $14.3 billion as of August 22. Meanwhile, the Pakistani rupee appreciated marginally by 0.05 per cent against the US dollar, closing the week at Rs281.77.
Key developments included the government enhancing the housing finance limit for microfinance borrowers to Rs5 million, ExxonMobil’s interest in returning to offshore exploration, and Pakistan initiating LNG supply talks with Qatar. The budget deficit narrowed to 5.4 per cent in FY25 from 6.8 per cent a year earlier. Sector-wise, top performers included jute (up 4.9 per cent WoW), property (4.8 per cent), cement (3.9 per cent), cable and electrical goods (3.4 per cent) and glass and ceramics (3.4 per cent). In contrast, woollen, leather and tanneries, textile spinning, insurance and pharmaceuticals lagged behind, falling between 3.2-4.5 per cent.
Flows data revealed foreigners and banks/DFIs recorded net selling worth $13.5 million and $9.9 million respectively, while mutual funds and companies absorbed much of the pressure with net buying of $17.4 million and $10.4 million.
Syed Danial Hussain, analyst at JS Research, noted that despite the week’s rangebound performance, local institutional buying largely offset foreign outflows, which totalled $43 million in August so far. He highlighted the Asian Development Bank’s approval of an $800 million loan and guarantee programme for Pakistan as a significant positive.
Nabeel Haroon, analyst at Topline Securities, observed that on a monthly basis the KSE-100 gained 6.5 per cent, supported by institutional inflows, ratings upgrade by Moody’s to Caa1, and remittances of $3.2 billion in July 2025.
Looking ahead, analysts expect the market to stay buoyant, with corporate earnings, declining interest rates and resolution of circular debt issues set to be the main drivers, although political and climate-related uncertainties may continue to inject short-term volatility.