Stock market rebounds as buying resurfaces amid earnings season, sectoral gains

The capital market mounted a rebound on Tuesday after four straight days of decline, as investors aggressively pivoted to buying following weeks of relentless selling pressure.

Renewed confidence in corporate earnings, a decline in coal prices benefiting cement stocks, and strong dividend payouts in the banking sector fueled the surge.

The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index surged by 1,344.94 points, or 1.2%, to close at 113,088.47. The market touched an intraday high of 113,252.54 and a low of 111,642.02, reflecting strong investor confidence across multiple sectors.

“We had been observing selling pressure over the past few weeks, but today, investors have shifted to the buying side," said Sana Tawfik, Head of Research at Arif Habib Limited. 

She further noted that the decline in coal prices had led to strong performance in the cement sector and that banks are offering good dividend payouts, and their financial results have been positive so far, leading to renewed buying in the banking sector.

“These are the sector-specific trends, while overall, the market has moved towards buying, primarily due to the ongoing results season,” she added.

Finance Minister Muhammad Aurangzeb, in an interview with Arab News on Monday, underscored Pakistan’s improving macroeconomic stability and its efforts to implement structural reforms.

“Pakistan and the Kingdom of Saudi Arabia have been long-standing partners, one of the strongest partnerships that we have,” he said, adding that Pakistan aims to learn from Saudi Arabia’s Vision 2030 as it embarks on its own economic transformation.

He also highlighted Pakistan’s improved debt-to-GDP ratio, which has fallen from over 73% to the mid-60s, and reaffirmed the government’s commitment to export-led growth.

“Pakistan will have to fundamentally change the DNA of the economy,” he said, emphasising that the International Monetary Fund (IMF) supports the country’s economic trajectory.

Pakistan’s textile exports surged by 15.85% year-on-year in January 2025, reaching $1.686 billion, compared to $1.477 billion a year earlier.

For the first seven months of FY25 (July-January), total textile exports rose 10.6% to $10.77 billion, up from $9.74 billion in the same period last year.

Meanwhile, the cement sector benefitted from a decline in coal prices, which improved profit margins and led to renewed buying interest. The banking sector also saw gains, with investors drawn to strong dividend payouts and solid earnings reports.

The PSX had faced selling pressure in previous sessions, however, Monday marked a reversal.

The KSE-100 Index closed at 113,010.38, up 1,632.42 points, or 1.47%, from the previous close of 111,377.96.

With earnings season in full swing, stable economic indicators, and improving sectoral performance, analysts expect continued positive momentum in the stock market in the coming sessions.