PSX settles flat after early rally fizzles out

The Pakistan Stock Exchange (PSX) ended the session flat after earlier gains were wiped out by profit-taking on Friday.

PSX’s benchmark KSE-100 Index closed at 146,491.63 points after losing 37.67 points or 0.03%, down from the previous close of 146,529.30 points.

However, the PSX registered +0.76% week-on-week increase. Topline Securities said attributed the weekly rise largely to the account of buying by mutual funds. “However, decline in positive stride was observed during the week.”

Top positive contribution to the index came from EFERT, LUCK, ENGROH, MEBL & AIRLINK, as they cumulatively contributed +512 points, on the other hand, OGDC, UBL, PPL, HUBC and MARI lost value to weigh down on the index by -499 points.

“It’s a range-bound activity nowadays led by mutual funds’ liquidity and earnings seasons. Moody’s credit rating is already incorporated,” said AAH Soomro, an independent investment and economic analyst.

Moody’s upgraded Pakistan's credit rating from Caa2 to Caa1, citing an improved external position and progress on reforms under the IMF (International Monetary Fund) Extended Fund Facility (EFF) programme.

The agency noted that foreign exchange reserves are likely to continue improving, though dependent on timely financing from official partners, while fiscal strengthening is supported by a broader tax base. However, it cautioned that debt affordability remains among the weakest globally, with governance and political uncertainty still high.

This marks the third upgrade in four months, following similar moves by S&P Global Ratings and Fitch Ratings, underpinned by Prime Minister Shehbaz Sharif’s government’s commitment to fiscal consolidation and reforms.

On the performance front, Pakistan secured the top global spot for equity returns in USD over FY24–FY25 combined, Bloomberg data showed. In FY25 alone, Pakistan ranked eighth globally but outperformed regional peers, returning far more than India’s BSE Sensex (+3.2%), China (+14.8%) and India’s broader market (+6%), according to AHL data.

The State Bank of Pakistan’s (SBP) latest Monetary Policy Report (MPR) projected GDP growth at 3.25–4.25% in FY26 and a current account deficit between zero and 1.0% of GDP.

With the policy rate maintained at 11% in June and July, the SBP expects the real policy rate to remain positive to stabilise inflation within target. Reserves are forecast to reach $15.5 billion by end-December 2025, supported by projected financial inflows and continued SBP FX purchases.