PSX sees mild recovery

Business Recorder

2 days ago

KARACHI: The PSX saw a mild recovery last week ended on May 30, supported by improved economic policy clarity. However, gains remained limited as investors braced for potential tax-related announcements in the upcoming Federal Budget.
The benchmark KSE-100 Index closed at 119,691 points on Friday, recording a gain of 588 points or 0.49 percent on a week-on-week (WoW) basis, up from 119,102.67 points at the close of the previous. Meanwhile, average daily trading volumes increased by 35 percent WoW, rising to 662 million shares compared to 491.5 million shares in the preceding week.
Market capitalization rose by Rs. 118 billion during the week, reaching Rs. 14.503 trillion compared to Rs. 14.385 trillion in the previous week.
BRIndex100 also gained 103.45 points during the last week to close at 12,842.51 points compared to 12,739.06 points a week earlier. Average daily turnover at BRIndex100 was 575.59 million shares. BRIndex30 up by 288.93 points on a week-on-week basis to 37,794.85 points with the daily average share trading volumes of 432 million.
Analysts noted that despite the uptick, the market remained largely range-bound, moving within a narrow band of 1,770 points, weighed down by uncertainty surrounding potential revenue measures in the Federal Budget FY26. Investors remained cautious ahead of the upcoming federal budget amid growing concerns over proposed tax measures.
On the economic side, the week commenced with IMF concluding its visit to Pakistan without reaching an agreement on certain budget items, leading the government to reschedule the budget presentation to June 10, 2025. However, the virtual negotiations are continuing, with both sides to focus on measures to enhance tax revenues and curtailing expenditures.
Meanwhile, China reaffirmed its commitment to refinance $3.7 billion in commercial loans denominated in the Chinese currency, before the end of June-2025.
In other developments, the SBP's net buying from the currency markets stood at $223 million in Feb-2025 to further strengthen foreign exchange reserves, bringing the cumulative purchases of $5.9 billion during 8 months of FY25.
In the recently held T-bill auction, SBP raised Rs772 billion against the target of Rs650 billion, with yields remaining largely flat across different maturities. Moreover, SBP reserves also rose by $70 million week on week to $11.52 billion.
According to AHL Research, the KSE-100 index remained range-bound throughout the week, weighed down by uncertainty regarding potential revenue measures in the upcoming Federal Budget FY26.
Foreign investors remained net sellers during the week, recording an outflow of $5.57 million, which was largely absorbed by local buyers. Overall, sentiment stayed cautious as market participants awaited clarity on fiscal policies and tax reforms expected in the upcoming budget announcement.
While analyzing on the monthly basis, Topline sales desk stated that the benchmark KSE 100 Index gained 7.5 percent on month on month (MoM) basis, this gain can be attributed to cut in policy rate by 100bps by SBP to 11 percent in its monetary policy meeting, citing the improvement in inflation outlook relative to the previous assessments and approval of first review of EFF by IMF board along with a new facility under Resilience and Sustainability Facility of $1.4 billion.
Analysts at AHL Brokerage house stated that market is expected to remain positive in the coming weeks, with developments around the upcoming federal budget likely to drive short-term sentiment, along with room for more rate cut in the upcoming Monetary Policy Committee (MPC) meeting as it forecasted inflation stands at 7.0 percent in next fiscal year.
The KSE100 is anticipated to sustain its upward trajectory, with a target of 165,215 points by December 2025, primarily driven by strong earnings in fertilizers, sustained ROEs in banks, and improving cash flows of E&Ps and OMCs, benefiting from falling interest rates and economic stability, they added.
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