KARACHI: The Pakistan Stock Exchange (PSX) reversed course in October, with the KSE-100 index falling 2.33 per cent for the month, marking its first negative close since February.

Market analysts attributed the decline primarily to profit-taking by insurance companies and mutual funds after an extended rally. Weak corporate earnings in the September quarter further weighed on investor sentiment, signalling a cautious near-term outlook.

According to Topline Securities Ltd, investor participation increased on a month-on-month (MoM) basis, with average daily traded volume rising 90 per cent to 1.4bn shares and average daily value climbing 25pc to Rs52.7bn. Despite higher trading activity, net buying was largely from companies, totalling $9.2m, while mutual funds were the major sellers, offloading $15m during the period.

Arif Habib Ltd reported that, on a week-on-week (WoW) basis, the KSE-100 shed 1,672 points or 1.02pc. The index opened the week at 163,309 points, peaked at 163,571, and touched a low of 156,328 before closing at 161,632. Market volatility was attributed to a combination of border tensions with Afghanistan and fluctuating corporate earnings.

Index records first monthly fall of 2.3pc since February

AKD Securities Ltd noted that the market recovered sharply in the last session of October, rebounding 4,900 points, driven by optimism following the ceasefire agreement between Pakistan and Afghanistan, brokered in Istanbul by Turkiye and Qatar.

Despite this, weekly average daily traded volumes fell 14.7pc to 1.564m shares, reflecting investor caution. The State Bank of Pakistan (SBP) maintained its policy rate at 11pc, in line with expectations, while external developments, including a marginal $16m increase in foreign exchange reserves to $14.5bn as of Oct 24. The SBP has projected reserves to rise to $17.8bn by June 2026.

On the economic front, Pakistan posted a current account surplus of $110m in September, reversing a $52m deficit in the same month last year. Foreign direct investment (FDI) reached $186m, slightly above August’s $175m.

Remittances grew 11pc year-on-year (YoY) to $3.18bn, while car sales reported by PAMA surged 67pc YoY to 17,174 units. In fiscal developments, authorities assured the IMF of additional revenue measures Rs200bn if 1HFY26 tax targets fall short.

Government initiatives included the formation of eight working groups to boost exports and industrial output, a $1bn oil facility pledged by Saudi Arabia, and an agreement with the Afghan Taliban to continue the ceasefire. Meanwhile, the privatisation of Pakistan International Airlines (PIA) is scheduled to be completed by December.

Sector-wise, vanaspati, leasing companies, and property stocks outperformed, rising 14pc, 8.7pc, and 3.4pc week-on-week, respectively, while glass & ceramics, investment banks, and automobile parts declined by 14.6pc, 4.6pc, and 4.2pc. Company-level gainers included S.S. Oil Mills Ltd (22.4pc), National Bank (8.2pc), and Interloop Ltd (8.2pc), whereas laggards were led by Tariq Glass Industries (21pc) and Packages Ltd (15.8pc).

Looking ahead, AKD Securities anticipates continued momentum in the KSE-100, supported by the IMF’s second review, minimal flood impact, improved global credit ratings, and lower fixed-income yields.

Analysts expect sentiment to benefit from potential foreign portfolio and direct investment flows, buoyed by improved ties with the US and Saudi Arabia. The KSE-100 currently trades at a multiple of 7.4x with a dividend yield of 6.6pc, offering comparatively attractive valuations amid limited alternative investment avenues.

Published in Dawn, November 2nd, 2025