KARACHI: After an unprecedented relief rally in post-ceasefire week, the Pakistan Stock Exchange (PSX) came under renewed selling pressure, forcing the index to close the outgoing in the red as jittery investors trimmed their positions amid fears of an unfriendly IMF-driven federal budget.
Contrary to the preceding week, when the benchmark KSE 100 index recovered a staggering 12,474 points or 11.64pc thanks to a US-brokered ceasefire between two nuclear-armed neighbors, the PSX faltered due to lacklustre conditions as investors preferred to remain on the sidelines before the announcement of the budget 2025-26.
The government has delayed unveiling the federal budget from June 2 to June 10 due to inconclusive discussions with the International Monetary Fund on taxation and fiscal measures.
According to the brokerage AKD Securities Ltd, the market remained range-bound during the outgoing week as uncertainty over the upcoming budget moderated investor confidence built on the Pak-India ceasefire and the IMF agreement.
The benchmark KSE-100 index lost 546 points or 0.5pc to close at 119,102.67 points week-on-week. Market participation also weakened, with the average daily traded volume falling by 25pc to 492m shares while the traded value plunged by 38pc to Rs23.8bn.
Developments related to the upcoming budget suggest the government is likely to push up the revenue target for FY26 to Rs14.3 trillion from the current year’s Rs12.3tr. A key highlight of the budget includes tariff rationalisation; capping the highest tariff at 15pc, removing Additional Customs Duty (ACD), and reducing Regulatory Duty by 80pc till FY30.
The National Accounts Committee announced the country’s economy is expected to grow by 2.68pc in the current fiscal year, a revision from earlier projections of 3.6pc, suggesting that Pakistan will fall short of its GDP target.
The size of the economy went up to $410.96bn in FY25 from $371.66bn in FY24, mainly driven by growth in the services sector, followed by industry and livestock, making it the 40th largest in the world and pushing per capita income to a record $1,824 from $1,680 in FY24.
The IMF’s first review report acknowledged that Pakistan had met all quantitative performance criteria, most indicative targets, and several structural benchmarks. However, the fund also revised the GDP growth and current account deficit forecasts, updated the timelines of structural benchmarks, and introduced new ones for the next fiscal year. The fund, however, endorsed the government’s plan to eliminate the power sector’s circular debt by FY31.
Despite a hefty rise in the State Bank of Pakistan’s reserves following the receipt of the second tranche of $1bn from the IMF, reaching a 17-week high of $11.4bn, the rupee depreciated by 0.11pc to Rs281.97 against the dollar week-on-week.
Other major developments include the IMF’s projection that external debt would rise to $126.7bn by FY26, profit repatriation increased by 115pc year-on-year in April, the economy grew by 2.4pc in Q3FY25, and power generation surged by 22pc in April.
Sector-wise, woollen, transport, and investment banks/companies and securities companies were amongst the top performers, up 11.3pc, 9.9pc and 7.1pc week-on-week.
On the other hand, Sugar & Allied Industries, Cement, and Cable & Electrical Goods reported a decline of 3pc, 2.8pc and 2.8pc, respectively.
Flow-wise, major net selling was recorded by mutual funds, other organisations, and companies with a net sell of $10.1m, $4.1m, and $2.9m, respectively.
On the other hand, individuals and insurance absorbed most of the selling with a net buy of $13.1m and $7.5m, respectively.
AKD Securities anticipates a positive momentum in the coming weeks, with developments around the upcoming federal budget likely to guide short-term sentiment. The KSE100 is expected to sustain its upward trajectory, with a target of 165,215 points by December, primarily driven by strong earnings in fertilisers, sustained ROEs in banks, and improving cash flows of E&Ps and OMCs, benefiting from falling interest rates and economic stability.
According to Arif Habib Ltd, investors are expected to remain cautious in the coming week as they await further clarity from the upcoming federal budget. The market is anticipated to remain in a consolidation phase, with support estimated at around 115,000 and resistance projected at 121,000.
Published in Dawn, May 25th, 2025
