PSX sinks 6,939 points amid tensions

The Pakistan Stock Exchange (PSX) endured a turbulent week, with the KSE-100 index plunging 6,939 points, or -6.1% week-on-week (WoW), to close near 107,000 amid rising geopolitical tensions between Pakistan and India.

Despite a partial rebound on Friday, the broader trend remained bearish. Meanwhile, the State Bank of Pakistan (SBP) slashed the policy rate by 100 basis points (bps) to 11%, prompting a downward shift in Kibor and secondary market yields.

On the macroeconomic front, remittances rose 13% year-on-year (YoY) in April to $3.2 billion, while State Bank's reserves climbed $118 million WoW. Additionally, Pakistan launched its Green Sukuk, targeting Rs20-30 billion for eco-friendly initiatives, even as the fiscal deficit widened and trade imbalances persisted.

On a day-on-day basis, the PSX witnessed a turbulent start to the week, with the benchmark KSE-100 index closing nearly flat amid rising tensions with India and State Bank's policy uncertainty. The index dipped steeply in early trading, falling 1,036 points. At close, the KSE-100 recorded a decline of just 11.70 points and settled at 114,102.

On Tuesday, the bourse closed lower as investor optimism over the State Bank's 100bps rate cut quickly gave way to concerns over escalating Pakistan-India tensions and Moody's warning about economic stability. The index recorded a decline of 534 points.

The market continued its downtrend and experienced a turbulent start to Wednesday's session, with the index nosediving over 6,500 points shortly after the open over heightened border tensions.

The KSE-100 briefly touched the low of 107,008 before staging a partial rebound, ultimately climbing to the intra-day high of 112,457 and closing the day down by over 3,500 points. On Thursday, stocks underwent yet another day of stampede as the PSX witnessed its largest single-day plunge of 6,482 points on intensifying fears of a war between Pakistan and India. The index settled at 103,527.

The market staged a robust recovery on Friday, where the benchmark index surged around 3,650 points, trimming some of Thursday's steep losses. Investor sentiment improved sharply amid optimism over the upcoming IMF's executive board meeting, which was expected to approve the Extended Fund Facility (EFF) tranche and a $1.3 billion Resilience and Sustainability Facility (RSF). The index settled at 107,175.

In its review, Arif Habib Limited (AHL) wrote that the KSE-100 index remained mostly in the red during the outgoing week amid mounting geopolitical tensions and concerns over further escalation.

On the economic front, the State Bank on Monday reduced its policy rate by 100bps to 11%. Subsequently, Kibor across all tenors decreased 64bps to 91bps. Similarly, the secondary market yields across three, six and 12-month tenors fell 55bps, 51bps and 48bps, respectively. In addition to this, Pakistan launched Green Sukuk, aiming to raise Rs20-30 billion for environmentally sustainable projects, AHL said.

Meanwhile, urea and di-ammonium phosphate sales dwindled 25% and 4% YoY, respectively, in April 2025. However, cement dispatches climbed up 13% YoY.

AHL pointed out that the finance ministry reported a budget deficit of Rs2,970 billion (2.4% of GDP) for 9MFY25. Furthermore, the State Bank's reserves increased $118 million to $10.3 billion.

The market closed the week at 107,175, plunging 6,939 points, or -6.08% WoW. Sector-wise, negative contributions came from banks (1,637 points), exploration and production (905 points), cement (738 points), technology (508 points) and pharmaceuticals (436 points). Meanwhile, the sector that contributed positively was sugar (7 points).

Stock-wise, negative contributors were UBL (617 points), Lucky Cement (435 points), Hubco (339 points), OGDC (338 points) and Mari Petroleum (321 points). Among individual stocks, the positive contribution came from Nestle (16 points), JDW Sugar (7 points) and IBFL (3 points).

Foreign buying was witnessed during the week, which came in at $1.52 million compared to net selling of $6.79 million last week. Average volumes arrived at 508 million shares (up 20% WoW) while average traded value settled at $98 million (up 0.3%), AHL added.

JS Global analyst Muhammad Waqas Ghani said in his report that the week began on a volatile note as markets in Pakistan reacted to heightened geopolitical concerns. By Thursday, the sentiment had weakened sharply following reports of Indian drone strikes on multiple cities, including Karachi and Lahore, after Pakistani forces downed their planes.