Pakistan: The Pakistan Stock Exchange (PSX) benchmark KSE-100 index fell 0.6 per cent during the outgoing week, losing 1,066 points to close at 167,089, as geopolitical tensions, high international oil prices and rising bond yields offset optimism over Pakistan’s staff-level agreement with the International Monetary Fund (IMF).
According to Arif Habib Ltd (AHL), market sentiment remained under pressure amid concerns over attacks on key shipping routes, expanding Houthi targets in Saudi Arabia and disruptions to international energy supplies. Brent crude remained above $100 per barrel, adding to concerns about inflation and domestic economic stability.
The IMF agreement on the fourth review of the Extended Fund Facility (EFF) and the third review of the Resilience and Sustainability Facility (RSF) provided some support to the market. The agreement could unlock $1.2 billion in funding, subject to approval by the IMF Executive Board, taking total disbursements under the programmes to around $5.7 billion.
What Factors Weighed on the Stock Market?
Investors remained concerned about the widening trade deficit, inflation and the outlook for interest rates. In its latest Pakistan Investment Bonds auction, the government raised Rs381 billion against a target of Rs350 billion.
Cut-off yields increased by 26 to 41 basis points on three-, five- and 10-year bonds, while the two-year yield declined by 19 basis points. Bids for 15-year bonds were rejected, prompting concerns about a possible policy rate increase at the next monetary policy announcement.
Sector-wise, banks led the losses, dragging the benchmark down by 566 points, followed by fertiliser companies with 234 points, automobile assemblers with 97 points, cement companies with 75 points and textile composite firms with 43 points.
Habib Bank, MCB Bank and United Bank collectively contributed 388 points to the decline. Fatima Fertiliser and Fauji Fertiliser Company also weighed on the index.
Oil marketing companies provided some support, contributing 110 points, while power companies added 36 points. Pakistan State Oil was the largest individual positive contributor, adding 113 points.
Trading activity weakened, with average daily volume falling 18.6 per cent week-on-week to 427 million shares. Average daily traded value declined 2 per cent to $67 million.
How Did Other Economic Indicators Perform?
Pakistan’s foreign exchange reserves held by the State Bank of Pakistan rose by $15 million to $21.5 billion as of October 2. The rupee appreciated 0.03 per cent against the dollar to close at Rs277.
Central government debt stood at Rs82.95 trillion at the end of August, up 7.1 per cent year-on-year but down 0.5 per cent from the previous month.
Cement dispatches increased 6 per cent year-on-year to 4.62 million tonnes in September, supported by a 7 per cent rise in domestic sales. During the first quarter of FY27, dispatches rose 4 per cent to 13.14 million tonnes, while local sales increased 8 per cent and exports declined 11 per cent.
Banking sector deposits grew 14 per cent year-on-year to Rs39.2 trillion at the end of August, while cotton arrivals increased 5 per cent to 3.2 million bales during September.
Oil production fell 6.4 per cent week-on-week to 63,700 barrels per day, while gas output declined 1.4 per cent to 2,999 million cubic feet per day. Petrol prices rose 2.1 per cent to Rs398.96 per litre, while high-speed diesel prices fell 0.9 per cent to Rs395.72.
Meanwhile, Sindh Engro Coal Mining Company is expanding its Thar Block-II mine to supply additional coal to Lucky Electric Power Company, potentially increasing the use of domestic coal and reducing reliance on imports.
Analysts expect quarterly corporate earnings and geopolitical developments to influence market performance in the coming weeks. They said easing inflation and lower oil prices could improve prospects for monetary easing, although continued geopolitical uncertainty may limit gains.
The KSE-100 was trading at a price-to-earnings ratio of 7.5 times, with a dividend yield of 6.7 per cent.