Stock traders likely to remain cautious ahead of federal budget

KARACHI: Stocks closed slightly lower during the outgoing week. The market is expected to stay cautious around budget proposals ahead of the federal budget for the financial year 2026.

“Market participants are expected to closely monitor the forthcoming budget proposals ahead of the federal budget announcement, as certain scrips may come into the limelight,” said brokerage Arif Habib Ltd.

The market remained under pressure throughout the week as investors adopted a cautious stance ahead of the upcoming budget announcement.

Overall, the KSE-100 remained negative with the index closing at 119,103 points, down 0.46 per cent WoW. Average volumes arrived at 491.8 million shares (down 25.4 per cent WoW), while the average value traded settled at $84.4 million (down 38.4 per cent WoW).

Foreigner selling was witnessed during this week clocked in at $0.29 million compared to a net sell of $9.13 million last week. Major selling was witnessed in banks ($1.09 million) followed by all other sectors ($0.73 million). On the local front, buying was reported by individuals ($13.08 million) and insurance companies ($8.10 million).

Sector-wise negative contributions came from cement (339 points), oil & gas exploration (268 points), fertilizer (222 points), chemical (62 points) and automobile assembler (55 points). Scrip-wise negative contributors were LUCK (257 points), FFC (237 points), MARI (211 points), MCB (131 points) and PPL (74.95 points).

The sectors that contributed positively were technology & communication (62 points), power generation & distribution (60 points), refinery (45 points), miscellaneous (31 points), and textile composite (31 points). Scrip-wise positive contributions came from NBP (127 points), SYS (66 points), BAHL (65 points), PKGP (56 points), and ATRL (48 points).

Analyst Nabeel Haroon at Topline Securities said the market remain largely lacklustre during the week as investors preferred to remain on sidelines before the upcoming budget announcement.

Wadee Zaman, an analyst at JS Global, said the KSE-100 posted mixed trends during the week, reflecting cautious investor sentiment ahead of the upcoming budget. The week began with high-level policy talks between Pakistan and the IMF regarding the upcoming budget, including discussions on measures to raise an additional Rs700 billion in revenue to meet FY26 targets. According to the recently issued first review report by the IMF, Pakistan has successfully met most of the major structural benchmarks under the current program.

Meanwhile, Pakistan is negotiating with UAE-based commercial banks to secure external financing of up to $350 million to help meet its external funding needs.

Auto financing in April 2025 clocked in at Rs263 billion, up 12 per cent YoY, marking the fifth consecutive month of YoY growth.

On the economic front, the National Accounts Committee (NAC) released the latest GDP data, revealing a 2.68 per cent YoY growth for FY25, with a 5.47 per cent YoY growth in 4QFY25. Meanwhile, profit rates across various National Savings Schemes (NSS) were reduced by up to 100 basis points (bps), with the most notable cut seen in the Savings Account (SA), where the return was lowered from 10.5 per cent to 9.5 per cent.

Additionally, power generation in April surged by 22 per cent YoY (highest in 48 months) to 10,513 GWh. SBP reserves rose by $1.03 billion WoW to $ 11.4 billion due to disbursement received from the IMF.