PSX slides amid fiscal deficits, IMF uncertainty and profit-taking

Investor sentiment remained cautious on Monday, with the stock market extending losses amid uncertainty over Pakistan’s stalled International Monetary Fund (IMF) review, deteriorating external balances, and lingering fiscal pressures.

“Markets are reacting to news flow around the IMF, shortage in FBR revenues, and the increasing trade deficit, which is leading to profit taking and pushing the index down," said Ahfaz Mustafa, CEO of Ismail Iqbal Securities.

"Result season should help ease this pressure in the coming days,” he added.

The Pakistan Stock Exchange's (PSX) benchmark KSE-100 Index closed at 158,443.42, down 4,654.77 points, or -2.85%, from the previous close of 163,098.19.

During the session, the index hit an intraday high of 161,988.12 points, down 1,110.07 points, or -0.68%, and slid to a low of 158,067.92 points, reflecting a drop of 5,030.27 points, or -3.08%.

“It’s an overall correction and healthy exchange of hands as people evaluate evolving domestic politics and Eastern border violence impact,” added AAH Soomro, an independent investment and economic analyst.

Investor caution deepened after the IMF’s review mission concluded without a staff-level agreement (SLA), with unresolved discussions on external financing tables and the Governance and Corruption Diagnostic (GCD) report delaying progress. Officials said these matters would be finalised in the coming week.

Adding to pressure, the Federal Board of Revenue (FBR) missed its annual FY25 collection target by Rs1.2 trillion, despite imposing Rs1.3 trillion in additional taxes. For the first quarter (July–September FY26), the shortfall stood at Rs190 billion, and the IMF has projected that the FBR could miss its annual target by over Rs400 billion for the current fiscal year.

Meanwhile, Pakistan’s trade deficit widened 46% year-on-year in September 2025 to $3.34 billion, as imports surged 14% to $5.85 billion while exports fell 11.7% to $2.5 billion, according to the Pakistan Bureau of Statistics (PBS). The July–September deficit rose 32.9% YoY to $9.37 billion, raising fears of renewed pressure on reserves and the rupee.

The National Accounts Committee revised FY25 GDP growth upward to 3.04% from 2.68%, while remittances grew 11% YoY to $3.2 billion in September, bringing the first-quarter total to $9.5 billion, up 8% YoY. The State Bank of Pakistan’s (SBP) foreign exchange reserves rose by $20 million to $14.4 billion, while the rupee appreciated slightly to Rs281.17 per US dollar.

On Friday, the KSE-100 Index had fallen 735.94 points, or 0.45%, to close at 164,530.81 points from 165,266.75 points a day earlier. The index touched an intraday high of 166,729.97 points and a low of 164,306.77 points.

During the outgoing week, the KSE-100 shed 3.5% week-on-week, closing at 163,098 points, with trading volumes falling 7.6% to 1.6 billion shares.