KARACHI: The Pakistan Stock Exchange (PSX) rallied to a historic high this week as investor sentiment turned bullish on the back of a newly signed trade agreement with the United States, better-than-expected fiscal performance, and a resilient corporate earnings season.
The benchmark KSE-100 index gained 1.3 per cent week-on-week, closing at a record 141,035 points, up 1,828 points from the previous week. The rally, according to market analysts, reflects renewed confidence in Pakistan’s macroeconomic trajectory, driven by external engagement, monetary stability, and positive corporate earnings outlook.
Topline Securities reported that the market remained largely range-bound at the start of the week as investors awaited June-quarter results. However, news of the US-Pakistan trade agreement later in the week boosted investor interest, particularly in export-led and energy-related stocks.
Arif Habib Ltd (AHL) attributed the week’s gains to optimism surrounding international cooperation, as well as robust financial results from key listed companies. The average daily trading volume stood at 562 million shares, while the average traded value was Rs36bn, reflecting a dip of 11.6pc in volume from the prior week.
Index closed at 141,035 points, driven by the US trade pact and robust corporate results
A major highlight of the week was the US-Pakistan trade pact signed on Thursday, which includes tariff reductions — from 29pc to 19pc — on select Pakistani exports and renewed commitments to bilateral investment.
This news, alongside a Rs1.3tr disbursement package by the government secured from commercial banks, led to a surge in exploration and production (E&P) and oil marketing company (OMC) stocks. The E&P sector alone contributed 1,222 points to the index, while OMCs added another 324 points, according to AKD Securities.
On the macro front, the State Bank of Pakistan (SBP) maintained its policy rate at 11pc, contrary to market expectations of a 50-100 basis points cut. The central bank cited inflationary concerns and external imbalances as key reasons for holding rates steady. Meanwhile, inflation in July ticked up to 4.1pc year-on-year, compared to 3.2pc in June.
The rupee appreciated marginally by 0.3pc week-on-week, closing at Rs282.72 against the US dollar. The SBP-held foreign exchange reserves declined by $153m to $14.3bn as of July 25, amid routine debt servicing and FX interventions. The SBP also reported having purchased $6.7bn from the interbank market during 10MFY25 to bolster reserves.
Fiscal performance was another bright spot. The Federal Board of Revenue (FBR) collected Rs754bn in July, surpassing its monthly target of Rs748bn by Rs6.4bn, reflecting a 14pc year-on-year increase. Additional policy changes included the removal of yarn, grey cloth, and raw cotton from the Export Facilitation Scheme, and the imposition of a Rs238 per mmBtu levy on gas used by captive power plants.
In the energy sector, petrol prices were slashed by Rs7.54 per litre to Rs264.61, while high-speed diesel (HSD) saw an increase of Rs1.48 per litre to Rs285.83, effective from August 1.
Sector-wise, jute (up 23.9pc), E&P (8.1pc), and OMCs (5.1pc) were top performers. In contrast, vanaspati & allied industries, woollen, and property sectors declined by 14.3pc, 7.3pc, and 6.0pc, respectively.
Institutional flows remained mixed. Banks and foreign investors recorded net outflows of $5.0m and $4.5m respectively, while mutual funds absorbed much of the selling with net purchases of $10.9m.
Among individual stocks, Bestway Cement Ltd rose 14.2pc, Oil & Gas Development Company Ltd climbed 13.2pc, Systems Ltd gained 11.3pc, while Pakistan Petroleum Ltd, and PSO were up 8.6pc each. The top laggards included
Engro Polymer & Chemicals Ltd (down 11.4pc), Bannu Woollen Mills Ltd (7.3pc), Javedan Corporation Ltd (6.7pc), Pakistan Services Ltd (5.9pc), and Mehmood Textile Mills Ltd (5.1pc).
Looking ahead, AKD Securities expects the bullish momentum to persist, driven by ongoing corporate earnings, government reforms, and potential resolution of the circular debt issue.
The brokerage forecasts the KSE-100 to reach 165,215 points by December 2025, buoyed by improving fundamentals in fertilisers, banks, E&Ps, and OMCs.
Published in Dawn, August 3rd, 2025