PSX eyes further highs as IMF review approaches

KARACHI: The Pakistan Stock Exchange (PSX) maintained its bullish run during the outgoing week, with analysts projecting a positive outlook for the coming sessions as the upcoming IMF review and developments on circular debt remain in focus.

According to AKD Research, investor sentiment is expected to stay upbeat, with liquidity and institutional activity continuing to drive market momentum. However, economic concerns such as a widening current account deficit and declining foreign direct investment could test the market’s resilience in the near term.

The benchmark KSE-100 Index advanced by 3,598 points or 2.33 per cent week-on-week (WoW) to close at 158,037 points, while briefly touching an all-time high of 159,337 points. Market activity remained robust, with average daily traded volumes rising by 41 to 43 per cent compared to the prior week. Daily participation stood between 1.54 billion and 1.8 billion shares, making it the second-highest average weekly volume in the exchange’s history. Traded value in the last session alone hit a record Rs87.4 billion.

Nabeel Haroon, an analyst at Topline Securities, attributed the rally to strong liquidity inflows and institutional buying, which pushed the market to fresh highs.

On the macroeconomic front, the State Bank of Pakistan (SBP) kept the policy rate unchanged at 11 per cent in its latest Monetary Policy Committee (MPC) meeting, citing possible headwinds from recent floods. The current account deficit for August 2025 stood at $245 million compared to $379 million in July, though still higher than the $82 million in the same period last year.

IT exports showed resilience, rising 13 per cent year-on-year (YoY) to $337 million, while foreign direct investment fell by 43 per cent YoY to $156 million in the first two months of FY26.

Syed Danyal Hussain, an analyst at JS Research, noted that despite strong market performance, pressure on external accounts and a decline in FDI remain significant concerns. Sector-wise performance reflected broad-based gains, with property, technology and communication, closed-end mutual funds, modarabas, and refinery stocks rising by 9.6, 7.3, 7.1, 7.0 and 6.4 per cent WoW, respectively.

Conversely, vanaspati and allied industries dropped 20.2 per cent, leasing companies slipped 10 per cent, while textile spinning, miscellaneous, and engineering declined marginally.

Flow-wise, foreigners remained net sellers with outflows worth $20.8 million, while local institutions absorbed the pressure. Mutual funds and insurance companies recorded net buying of $17.7 million and $6.3 million, respectively.

Key developments influencing sentiment included Pakistan’s dollar bonds reaching a four-year high, talks of a possible Rs50 billion mini-budget as the government seeks IMF concessions, and progress on trade ties with Turkey and Iran.

Large-scale manufacturing also posted a 9.0 per cent YoY increase in July, led by autos, while power generation for August grew 8.0 per cent YoY to 14,218 GWh, with generation costs falling 18 per cent. On the currency front, the rupee gained marginally by 0.03 per cent against the US dollar, closing the week at 281.46.