PSX seen gaining further on debt deal, IMF hopes

KARACHI: The stock market outlook for next week appears positive, with AKD Research highlighting the ongoing IMF review as the key event to watch.

Investor confidence remains buoyant after a week of historic gains, supported by Prime Minister Shehbaz Sharif’s meeting with US President Donald Trump; a landmark Rs1.2 trillion debt settlement agreement with commercial banks; and renewed optimism over Saudi economic engagement.

Analysts expect momentum to sustain in the near term, particularly in the banking, energy and power sectors, though IMF conditionalities and external financing remain critical risk factors.

During the week, the benchmark KSE-100 Index climbed 4,220 points or 2.67 per cent, closing at an all-time high of 162,257 points on Friday. Bullish sentiment was fuelled by the signing of the debt arrangement aimed at reducing circular debt in the power sector, which added 888 points to the index.

Exploration and production (E&P) companies also supported the rally with a contribution of 1,084 points, while commercial banks added 955 points. According to Nabeel Haroon, analyst at Topline Securities, the 2.7 per cent week-on-week gain was driven by the circular debt resolution, the Pakistan-Saudi defence agreement, and high-level US diplomatic engagement.

Syed Danyal Hussain, analyst at JS Research, noted that the index not only surpassed its year-end target of 160,000 points but also closed well above it at 162,257 points. He credited banking, cement, fertiliser and power sectors as the leading drivers of the calendar-year-to-date rally, contributing 43 per cent, 17 per cent, 11 per cent and 7.0 per cent, respectively.

Hussain also emphasised that the Rs1.225 trillion financing deal, combined with Pakistan’s push for external financing, including Panda bonds and fresh commercial loans, continued to strengthen sentiment.

Trading activity surged to record levels, with average traded volumes rising 20 per cent week-on-week to 2.2 billion shares, while daily traded value averaged Rs60 billion. Mutual funds and individual investors emerged as major buyers, recording net inflows of US$35.6 million and US$6.7 million, respectively. On the flip side, banks and foreign investors remained net sellers, offloading $15.8 million and $13.7 million.

On the sectoral front, power generation rose 12.4 per cent, E&P gained 5.4 per cent, and pharmaceuticals advanced 4.4 per cent, making them the week’s top performers. In contrast, woollen, leasing companies and textile spinning stocks declined 5.9 per cent, 4.1 per cent and 3.2 per cent, respectively. Fertiliser sales also provided support, with urea and DAP offtakes jumping 46 per cent and 53 per cent year-on-year in August 2025, boosted by discounts and low channel inventories.

Macroeconomic developments further underpinned the rally. The State Bank of Pakistan reported an increase of $22 million in foreign exchange reserves, which stood at $14.4 billion as of September 19, 2025. The Pakistani rupee also strengthened slightly by 0.03 per cent, closing at Rs281.37 against the US dollar.

Key news flow included IMF concerns over missed tax targets, power tariff cuts of 10 per cent following debt repayment, Japan’s plan to invest in the Reko Diq project, and Pakistan’s request for tariff concessions from China on 700 items.

Looking ahead, analysts caution that while short-term momentum favours further gains, the market’s trajectory will hinge on the progress of IMF negotiations, the scale of Saudi investment inflows, and Pakistan’s ability to secure timely external financing. With liquidity strong and investor optimism high, next week is likely to extend the bullish run unless external shocks or policy slippages emerge.