PSX ends volatile week amid border tensions
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The Pakistan Stock Exchange (PSX) remained under pressure throughout the week, with the benchmark KSE-100 index shedding 1,355 points to close at 114,114 amid escalating geopolitical tensions. A mid-week plunge of 3,546 points on Wednesday underscored investor unease, particularly around rising hostilities in the region. However, market sentiment found some reprieve by Friday, rebounding 2,787 points day-on-day, following signals of de-escalation and optimism around Pakistan's upcoming International Board Meeting (IMF) board review scheduled for May 9.
On the macroeconomic front, inflation in April slowed to a historic low of 0.28% year-on-year (YoY), bringing the 10MFY25 average to 4.73%, compared to 25.97% in the same period last year. Meanwhile, investor activity remained subdued with average volumes down 29% week-on-week (WoW), and foreign outflows totalled $6.8mn, primarily in commercial banks and E&Ps. Looking ahead, market participants await the May 5 Monetary Policy Committee (MPC) meeting, where a 50 basis point rate cut is anticipated, potentially lifting investor sentiment further.
On a day-to-day basis, on Monday, the KSE-100 index recorded a decrease of 1,405.45 points, or 1.22%, and settled at 114,063.90 amid escalating Pak-India tensions.
On Tuesday, stocks rallied at the PSX, reversing early losses to close significantly higher amid renewed investor optimism driven by reports of an upcoming the IM meeting to discuss critical loan disbursements, alongside easing regional tensions and anticipated policy support. The benchmark KSE-100 index recorded an increase of 808.28 points, or 0.71%, and settled at 114,872.18.
On the next day, bears went on a wild rampage at the PSX, dragging the benchmark KSE-100 index down by 3,545.60 points, or 3.09%, and settled at 111,326.58 as Pakistan-India war fears and policy rate uncertainty triggered massive sell-off.
On Friday, market opened after the "May Day" holiday and staged a sharp recovery, with the benchmark KSE-100 index surging 2,787.36 points, or 1.2% 1.2% week-on-week (WoW) settling at 114,113.94 as investors reacted positively to a mix of encouraging developments including easing regional tensions, record-low inflation data, and renewed hopes of monetary policy easing by the State Bank of Pakistan (SBP).
JS Global Syed Danyal Hussain wrote falling global oil prices led the government to decrease petrol and HSD prices by Rs2/litre. Furthermore, the IMF announced that they will consider Pakistan's request for approval of a $2.3billion package on May 9, including $1.3billion for climate resilience and sustainable development.
Pakistan's tax collection target fell short by Rs833billion in 10MFY25, breaching the IMF-set tax shortfall limit by Rs193billion.
In other news, the govt has decided to reduce its power procurement plans from 14,000MW to 7,000MW, aiming to save Rs4.7trillion.
Arif Habib Limited (AHL), wrote in its weekly report that the market remained under pressure throughout the week, extending its bearish spell from last week due to ongoing geopolitical tensions and wiped off 3,546points day-on-day (DoD) on Wednesday.
Amidst this, the announcement of the IMF Executive Board meeting schedule to review and approve the disbursement of $1billion under the ongoing EFF (First Review), along with an additional arrangement of $1.3billion for Resilience and Sustainability Facility, cushioned the overall decline. On Friday, the market rebounded, gaining 2,787points DoD amid growing expectations of a de-escalation in geopolitical tensions.
On the economic front, inflation in April, 2025 depicted a meagre jump of 0.28% YoY (an all-time low), bringing the 10MFY25 average inflation to 4.73%, compared to 25.97% in 10MFY24. Meanwhile, in the T-bill auction held this week, the SBP raised Rs562billion (surpassing the target of PKR 400billon), with the cut-off yield for the 1M tenor decreasing by 17bps. Albeit, the market closed at 114,114pointsts, shedding 1,355points, or 1.2% WoW.
Sector-wise negative contributors were exploration & production, (474pts), cement (289points), pharmaceuticals (258points), fertiliser (256points), and automobile assembler (129points).
During the week, foreign investors sold shares worth $6.8million compared to a net buying of $2.09million last week.
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