PSX gains 1% WoW on investor confidence

Despite a subdued start, the Pakistan Stock Exchange (PSX) recorded a positive trend this week, with the KSE-100 index gaining 1% week-on-week (WoW), closing at 115,536 points. Investor sentiment improved midweek, primarily driven by China’s $1 billion debt rollover and optimism surrounding ongoing talks with the International Monetary Fund (IMF) for the first review of the $7 billion Extended Fund Facility (EFF) programme.

On a day-to-day basis, PSX on Monday closed almost flat, down 42.36 points, or 0.04%, settling at 114,356.34, amid uncertainty surrounding the State Bank of Pakistan’s (SBP) monetary policy decision later in the day and the outcome of review talks with the IMF.

On the following trading day, the market continued its downward trajectory, closing lower by 179 points, or 0.16%, at 114,177.66. Analysts attributed the decline to thin trade and investor caution following the SBP’s decision to keep the policy rate unchanged amid inflationary pressures, price volatility, and external account challenges.

On Wednesday, PSX experienced a subdued trading session again as the KSE-100 index recorded a decline of 93.12 points, or 0.08%, settling at 114,084.54 because of a lack of positive triggers.

Thursday saw PSX stage a handsome rebound as the KSE-100 index soared 1,009.70 points, or 0.89%, settling at 115,094.24, on the back of optimism about a positive outcome of the ongoing IMF review and Moody’s upgrading of the banking sector outlook.

On the final trading day of the week, PSX closed on a bullish note as investor confidence remained strong, driven by expectations of a favourable IMF review and an optimistic earnings outlook. At the end of trading, the benchmark KSE-100 index posted a surge of 441.93 points, or 0.38%, to settle at 115,536.17.

According to Arif Habib Limited (AHL) wrote in its weekly report that at the onset of the week, the committee decided to maintain interest rates at 12%, contrary to expectations of a 50bps cut, culminating in negative impact on the market initially. Towards midweek, the momentum shifted to the green zone on the anticipation of potential development related to the settlement of energy circular debt. Furthermore, the IMF has agreed to cut FBR’s tax collection target, leading to further improvement in sentiment. Moreover, remittances by overseas Pakistanis increased by 39% YoY to $3.1 billion in February 2025, the highest since June 2024. The KSE-100 index closed at 115,536 points, reflecting a gain of 1,137 points, +0.99% WoW.

Sector-wise, the highest positive contributions came from Exploration & Production (234 points), Oil Marketing Companies (194 points), banks (179 points), cement (118 points), and fertiliser (110 points). Conversely, negative contributions came from engineering (46 points), glass & ceramics (45 points), leather & tanneries (37 points), and automobile assemblers (36 points).

Scrip-wise, the biggest positive contributors were MARI (303 points), PSO (174 points), HBL (65 points), EFERT (53 points), and DGKC (51 points). On the other hand, the biggest negative contributions came from MTL (52 points), SRVI (37 points), PPL (34 points), HMB (28 points), and ISL (28 points).

Foreigner selling continued during this week, clocking in at $2.61 million compared to a net sell of $5.3 million last week. Major selling was witnessed in Commercial Banks ($2.8 million), followed by E&P ($1.2 million). On the local front, buying was reported by Banks/DFIs ($110.9 million) and Other Organisations ($1.7 million). Average volumes arrived at 337 million shares (up 16% WoW), while the average value traded settled at $79 million (up 21.1% WoW).

Other major news included Engro completing the divestment of Eximp Agriproducts for Rs2.4 billion, Haleon Pakistan shipping its first Centrum consignment to Kenya, OGDCL reviving Rajian-11 heavy oil well and restoring production to 1,000 BPD, K-Electric petitioning for a tariff cut of Rs4.84, and SBP approving Silk Bank’s merger with United Bank Limited.

Topline Securities attributed the KSE-100 index’s 1% weekly gain to China’s $1 billion debt rollover and positive developments in IMF negotiations. Other key factors included the SBP’s decision to maintain the policy rate at 12%, February 2025’s remittances hitting $3.1 billion (up 39% YoY and 4% month-on-month), and Pakistan’s car sales reaching 12,084 units (up 24% YoY but down 29% MoM).

The average daily traded volume and value during the week stood at 337 million shares (up 16% WoW) and Rs22 billion (up 21% WoW), respectively.