PSX gives up gains despite IMF deal

Benchmark KSE-100 index falls 0.6%; geopolitical risks weigh

KARACHI:

The Pakistan Stock Exchange (PSX) closed lower during the outgoing week, with the benchmark KSE-100 index shedding 1,066 points, or 0.6%, to settle at 167,089 on Friday, as persistent geopolitical tensions offset optimism over Pakistan's staff-level agreement with the International Monetary Fund (IMF) for disbursement of $1.2 billion in loan tranches.

On a day-on-day basis, Monday saw a negative start due to regional and domestic political conditions. The KSE-100 dived 2,288 points (-1.36%) to close at 165,867 by breaching the 166k level, a key support. Nevertheless, the market staged a strong comeback on Tuesday, with the index gaining 2,593 points (+1.56%) to 168,460, reclaiming the 168k level.

PSX witnessed consolidation on Wednesday, rising just 120 points (+0.07%) to close at 168,580. On Thursday, the IMF's successful review met geopolitical headwinds. The KSE-100 declined 1,139 points (-0.68%) to 167,442. On Friday, the index traded in both directions amid cautious investor sentiment, driven by geopolitical uncertainty and squaring of positions ahead of the weekend. The index lost 353 points (-0.21%) and settled at 167,089.

Arif Habib Limited (AHL) noted that the KSE-100 declined marginally by 0.6% week-on-week (WoW) to 167,089, shedding 1,066 points, as positive sentiment from the IMF staff-level agreement was partly offset by persistent geopolitical uncertainties. Pakistan and the IMF reached a staff-level agreement on the fourth Extended Fund Facility (EFF) and third Resilience and Sustainability Facility (RSF) reviews, paving the way for $1 billion and $210 million in loan disbursements, respectively, subject to the executive board approval, which would bring total disbursements under both programmes to $5.7 billion.

AHL mentioned that the central government debt decreased by 0.5% month-on-month (MoM) to Rs82.95 trillion (+7.1% year-on-year – YoY) as of Aug'26 compared with Rs77.46 trillion in Aug'25. The government raised Rs381 billion in the recent Pakistan Investment Bond (PIB) auction against the target of Rs350 billion, with Rs208.4 billion allocated to three-year bonds. Yields increased by 26-41 basis points across three, five and 10-year tenors, declined 19 basis points for two-year bonds, while bids for 15-year papers were rejected.

Total cement dispatches rose 6% YoY to 4.62 million tons in Sept'26, driven by a 7% increase in domestic sales, while exports remained flat. 1QFY27 dispatches grew 4% YoY to 13.14 million tons, supported by an 8% growth in local sales despite an 11% dip in exports.

SECMC, a public-private partnership between the government of Sindh and Engro along with its affiliates, was expanding its Thar Block-II coalmine to supply additional coal to Lucky Electric Power Company Ltd (LEPCL). The expansion was expected to enable LEPCL to fully transition to local Thar coal, improving utilisation and regulated returns while reducing reliance on imported coal, which would support foreign exchange savings and strengthen energy security.

Meanwhile, Sazgar Engineering's four-wheeler sales remained flat YoY at 2,474 units in Aug-Sept'26, bringing 1QFY27 sales down 12% to 3,137 units, primarily due to a weak July. Three-wheeler sales rose 32% YoY to 5,173 units during Aug-Sept'26, driving 1QFY27 three-wheeler sales growth of 45% and overall sales growth of 22% to 10,872 units.

Oil production declined 6.4% WoW to 63.7k barrels per day due to lower flows from northern fields, while gas production fell 1.4% WoW to 2,999 million cubic feet per day (mmcfd) amid reduced output from Mari, Sui and Sharf, AHL added in its report.

Wadee Zaman of JS Global noted that the KSE-100 index declined 0.6% WoW to close at 167,089, amid persistent US-Iran tensions and escalating clashes between Saudi Arabia and Yemen's Houthi forces, prompting the Makkah Defence Alliance to agree on a rapid force deployment. Brent crude remained above $100/barrel, while domestic fuel prices saw mixed adjustments, with motor spirit rising by Rs6.20/litre to Rs398.96/litre and high-speed diesel falling by Rs3.92/litre to Rs395.72/litre.

On the domestic front, Zaman said, Pakistan reached a staff-level agreement with the IMF to unlock $1.2 billion under the fifth tranche of the EFF and third tranche of the RSF. The Fund urged the government to phase out fuel subsidies, broaden the tax base and ensure timely energy tariff adjustments, cautioning that risks remained elevated amid geopolitical tensions, volatile energy prices and trade disruptions.

In other developments, the government debt declined 0.5% MoM to Rs82.95 trillion in Aug'26, although it went up 7.1% YoY. Meanwhile, the SOE debt surged to Rs10.1 trillion by the end of Dec'25, according to the finance ministry. In the latest PIB auction, the government raised Rs352 billion, with yields rising 26-41 basis points across different tenors. Meanwhile, the SBP reserves remained stable at $21.5 billion, Zaman added.