PSX edges up as budget uncertainty prevails

Prospects of policy easing, circular debt resolution drive index up by 40 points

KARACHI:

The Pakistan Stock Exchange (PSX) on Monday began the week with mixed sentiment as investors traded cautiously over pre-budget uncertainty, a widening trade deficit and concerns over the proposed tax measures amounting to Rs700 billion.

Despite investor caution over the International Monetary Fund's (IMF) lower growth forecast for FY25, the market showed resilience, with the KSE-100 index posting a slight gain of 40 points at close. Optimism surrounding the monetary easing and circular debt resolution helped maintain some bullish momentum.

Ahsan Mehanti of Arif Habib Corp remarked that stocks closed flat amid uncertainty in the pre-budget session, a $3.4 billion trade deficit for April 2025 and geopolitical tensions.

Investor concerns over the proposed new tax measures amounting to Rs700 billion alongside the IMF's forecast for a lower 2.6% growth in FY25 impacted market sentiment. However, projections for higher tax collection at 12.6% of GDP, or Rs14.4 trillion, and monetary policy easing played the role of catalysts in positive close at the PSX, he added.

At the end of trading, the benchmark KSE-100 index recorded an increase of 40.49 points, or 0.03%, and settled at 119,689.63.

In its review, Topline Securities noted that the local bourse was in a consolidation phase as it hovered close to the all-time high. The index moved within a wide range, recording the intra-day high of 636 points and intra-day low of 398 points, before closing up 40.49 points. It said the steady upward bias was supported by investor optimism following the release of a detailed IMF report, which offered a clearer picture of Pakistan's macroeconomic trajectory and policy direction.

Adding to the positive sentiment, fresh developments on resolving the circular debt issue once again made headlines, drawing investor interest to key energy and gas sector players including Pakistan Petroleum, Oil and Gas Development Company, Pakistan State Oil, Sui Northern Gas Pipelines and Sui Southern Gas Company.

On the upside, Topline added, heavyweights such as Engro Holdings, Pakistan Petroleum and Pakistan State Oil led the charge, collectively contributing 246 points to the index. However, Mari Petroleum, UBL and Lucky Cement erased 224 points.

Insight Securities Head of Sales Ali Najib commented that the PSX commenced the week with a range-bound activity as the KSE-100 index floated in a band of 1,035 points. Pakistan's strong external position, current account surplus and lower inflation may spur economic activity and monetary easing, which would boost equities, he said.

Overall trading volumes decreased to 425.4 million shares compared with Friday's tally of 572.3 million. The value of shares traded during the day was Rs22.3 billion. Shares of 465 companies were traded. Of these, 222 stocks closed higher, 199 fell and 44 remained unchanged.

Fauji Foods was the volume leader with trading in 60.6 million shares, gaining Rs1.11 to close at Rs16.28. It was followed by Crescent Star Insurance with 20.1 million shares, gaining Rs0.13 to close at Rs3.15 and At-Tahur Limited with 18.3 million shares, falling Rs3.70 to close at Rs46.13. During the day, foreign investors sold shares worth Rs24.8 million, the National Clearing Company reported.