Pakistan Stock Exchange (PSX) ended the outgoing week on a positive note, where the KSE-100 index closed at 113,252 points, reflecting a week-on-week (WoW) gain of 0.40%, or 451 points.
Investor sentiment remained upbeat, driven by improved liquidity and optimism surrounding discussions on an additional $1 billion climate financing under the International Monetary Fund's (IMF) $7 billion Extended Fund Facility (EFF).
A key highlight of the week was the signing of a memorandum of understanding (MoU) between Pakistan and Iran to boost bilateral trade to $10 billion. However, caution prevailed as investors closely monitored potential corporate and provincial tax reforms ahead of the IMF's budget review for FY26.
On a day-on-day basis, the PSX started the week with bullish trading, powered by a pre-budget rally that saw the benchmark KSE-100 index surge 1,529 points. It came in the backdrop of finance minister's comments on rising workers' remittances, higher foreign exchange reserves, low inflation and support for the construction industry.
On Tuesday, the market closed modestly higher, where it took cue from robust financial results in key sectors. The index reached the high of 115,890 points during the day, before settling at 114,528, an increase of 198 points. Bullish activity was driven by several factors including an anticipated reduction in industrial power tariffs, low inflation, the potential privatisation of state-owned enterprises (SOEs) and the upcoming IMF review.
On the following day, the PSX experienced a volatile trading session as profit-taking halted the recent rally, causing a decline of 666 points. Following two days of strong buying by local mutual funds, investors opted to book profit, which resulted in fluctuations throughout the session.
On the second last day of the trading week, the market fell slightly in range-bound trading, with investors awaiting market-moving triggers and resorting to profit-taking in a couple of key sectors. In the morning, the index kicked off trading on a positive note but it closed down by 78 points.
On the last trading day, the market registered a notable downturn of 533 points because of market consolidation and concerns over an increase in inflation.
Arif Habib Limited (AHL) wrote in its weekly report that the stock market ended the week in the green zone, supported by improved liquidity on the local front and positive investor sentiment surrounding discussions on an additional $1 billion in climate funding under the IMF's Extended Fund Facility.
A key development was the signing of an MoU between Pakistan and Iran, aimed at increasing bilateral trade to $10 billion. However, investors remained cautious, closely monitoring potential corporate and provincial tax reforms ahead of the IMF review, AHL said. On the macroeconomic front, the State Bank's foreign exchange reserves augmented $21 million and settled at $11.22 billion while the Pakistani rupee depreciated slightly by 0.04% to 279.57 against the US dollar.
Sector-wise, positive contribution came from commercial banks (510 points), glass & ceramics (83 points), power generation (78 points), E&P (68 points) and food (47 points). Stock-wise, positive contributors were OGDC (206 points), MCB Bank (203 points), Bank AL Habib (176 points), Meezan Bank (106 points) and Maple Leaf Cement (95 points).
Foreigners' selling continued during the week, which came in at $6 million compared to net selling of $5.1 million in the previous week, AHL added.
Muhammad Waqas Ghani of JS Global wrote in his report that KSE-100 remained positive during the outgoing week.
"Following a 2.4% inflation reading in January, we believe that the CPI (Consumer Price Index) is expected to drop to 2.3% in February, marking a more than nine-year low and continuing Pakistan's current sharp disinflationary trend," he said.
"Given rapid disinflation, our base case CPI estimate for FY25 averages 5.7%. In our view, an uptick in food inflation will be seen during Ramazan." He mentioned that the Finance Division, in its recent update, also shared expectations of a rise in inflation for March, reaching around 3-4%.
Despite external debt repayments, he added, the central bank reserves remained stable at $11.22 billion.
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