Stocks may stabilise next week

KARACHI: The Pakistan Stock Exchange (PSX) is expected to regain ground next week after a sharp 3.5 per cent drop, as analysts anticipate sentiment to improve on optimism over progress in the International Monetary Fund’s second review, recent credit rating upgrades, and prospects of foreign inflows amid strengthening ties with the United States and Saudi Arabia.

During the outgoing week, investor caution sparked by the International Monetary Fund’s (IMF) inconclusive review mission and political instability caused the PSX to have a turbulent week, with the KSE-100 index falling 3.5 per cent week-over-week to close at 163,098 points.

AKD Research noted that with the KSE-100 trading at an attractive price-to-earnings multiple of 7.4x and offering a dividend yield of 6.6 per cent, equities continue to present compelling value, particularly in the absence of alternative investment options.

During the outgoing week, investor sentiment was dampened as the IMF mission departed without securing a staff-level agreement, though the mission chief acknowledged substantial progress, with further talks scheduled in Washington.

The index lost 5,891 points, while average daily trading volumes fell by 7.6 per cent to 1.6 billion shares compared with 1.8 billion shares in the preceding week.

Syed Danyal Hussain, an analyst at JS Research, said the market correction followed an extended five-week bull run, as investors opted for profit-taking across major sectors including oil and gas exploration (down 5.5 per cent), cement (down 4.6 per cent), and banking (down 3.4 per cent). He added that despite short-term pressure, structural progress such as ongoing privatisation and resilient remittance inflows remains supportive for the market’s medium-term outlook.

Macroeconomic data provided a mixed picture. The National Accounts Committee revised Pakistan’s FY25 GDP growth to 3.04 per cent from 2.68 per cent earlier, while workers’ remittances climbed 11 per cent year-on-year to $3.2 billion in September 2025, taking the first-quarter total to $9.5 billion, up 8.0 per cent year-on-year.

The State Bank of Pakistan’s (SBP) foreign exchange reserves rose by $20 million to $14.4 billion, and the rupee appreciated marginally by 0.03 per cent to close at 281.17 against the US dollar.

Other key developments included Pakistan shipping its first rare earth minerals consignment to the United States (US), discussions to attract Saudi investment following a defence pact, and a reduction of Rs430 billion in government debt during July–August 2025.

Sector-wise, leasing companies, technology and communication, modarabas, jute and real estate investment trusts led the gainers, rising between 1.3 per cent and 11.8 per cent week-on-week. Conversely, tobacco, vanaspati, engineering, glass and ceramics, and refinery sectors posted sharp declines of 6.1 to 20.9 per cent.

Among individual stocks, PTC (up 27.5 per cent), ABL (up 6.2 per cent), AICL (up 5.7 per cent), POL (up 3.2 per cent), and AKBL (up 1.8 per cent) were notable gainers, while ISL (down 13.3 per cent), TGL (down 10.1 per cent), PAEL (down 9.3 per cent), CNERGY (down 8.8 per cent) and UNITY (down 8.8 per cent) lagged behind.

Nabeel Haroon, an analyst at Topline Securities, attributed the week’s weakness to uncertainty over IMF demands regarding a $11 billion trade data gap, heavy selling by insurance firms (net sell of US$25 million), and heightened regional tensions after the Kabul blast. He noted that investor participation fell 8.8 per cent week-on-week to 1.35 billion shares, with traded value down 24 per cent to Rs54.8 billion.

Analysts expect the market to stabilise as clarity on IMF discussions emerges and macroeconomic indicators show resilience, potentially setting the stage for a rebound in the coming sessions.