KSE-100 ends week strong; outlook remains positive on robust economic indicators

KARACHI: The Pakistan Stock Exchange (PSX) sustained its bullish momentum during the outgoing week, with the benchmark KSE-100 index surging by 2,462 points (+2.1 per cent WoW) to close at an all-time high of 117,316. Positive macroeconomic indicators, coupled with investor optimism and continued institutional buying, played a key role in extending the rally. Analysts expect the market to remain buoyant in the coming sessions, bolstered by strong corporate earnings and progress on critical economic reforms.

Brokerage house Arif Habib Ltd added that “the market is expected to maintain its positive trajectory in the upcoming week, supported by improved investor sentiment and strong macroeconomic cues.” It added that the result season is likely to drive activity across the board, especially in sectors where companies are projected to post robust earnings.

The rally was driven by multiple tailwinds, with the announcement of a record $1.2 billion current account surplus for March 2025 being a major catalyst. This surplus marks the highest-ever monthly surplus for the country and signals a significant improvement in the external account. Meanwhile, progress on resolving the long-standing power sector circular debt further boosted confidence. A Rs1.275 trillion rescue package was finalized by leading banks to stabilise the power sector, raising expectations for broader structural reforms.

Despite the market’s strong showing, trading volumes saw a decline. Average daily volumes fell by 18 per cent WoW to 456 million shares, while average daily traded value slipped 5.0 per cent WoW to $116 million.

Foreign investors turned net sellers during the week, offloading shares worth $4.01 million, in contrast to net buying of $9.92 million the previous week. Foreign selling was concentrated in miscellaneous sectors ($5.7 million) and banks ($1.4 million). On the other hand, local participants stepped in strongly, with banks buying equities worth $69 million and individual investors contributing $21.9 million in net purchases.

Sector-wise, the banking sector was the top performer, contributing a whopping 1,736 points to the index, followed by cement (566 points), automobiles (184 points), power (152 points), and technology (53 points). Key individual stock performers included United Bank Limited (UBL), which alone added 1,537 points to the index, along with LUCK (429 points), HUBC (160 points), NBP (149 points) and SAZEW (121 points). However, some sectors weighed on the index. Fertilizer stocks dragged the index down by 288 points, followed by exploration and production (172 points), miscellaneous (13 points), engineering (13 points), and cable and electrical goods (8 points). Among individual laggards were FFC (-316 points), MARI (-231 points), HBL (-65 points), FATIMA (-22 points) and EPCL (-21 points).

Topline Securities’ analyst Nabeel Haroon attributed the market’s recovery to overall stability in global markets and a stream of positive news on the economic front. “The KSE-100 index posted a 2.14 per cent gain WoW, thanks to record-breaking workers’ remittances of $4.06 billion in March 2025 (up 37 per cent YoY), a credit rating upgrade by Fitch from ‘CCC+’ to ‘B-’, and the $1.2 billion current account surplus,” he said.

Abdul Basit, an analyst at JS Global, echoed the positive sentiment. He highlighted that the week saw substantial economic progress. The current account surplus of $1.2 billion was underpinned by record-high remittances of $4.1 billion, up 37 per cent YoY, marking a strong vote of confidence from the overseas Pakistani community.

Further optimism stemmed from the State Bank of Pakistan’s (SBP) revised reserves outlook. The central bank now expects FY25 year-end reserves to reach $14 billion, up from the previous target of $13 billion. Adding to the positive developments, Kuwait extended its oil credit facility to Pakistan for another two years, offering relief in energy financing.

On the fiscal side, the government increased the petroleum levy by Rs8.02/litre on petrol and Rs7.01/litre on diesel, aligning with its infrastructure spending commitments amid falling international oil prices. The SBP also successfully raised Rs965 billion in a recent T-bill auction -- exceeding the Rs850 billion target -- with yields remaining broadly stable. The SBP’s foreign exchange reserves increased by $127 million to $10.7 billion, further reinforcing the country’s improving macroeconomic stability.

With multiple macroeconomic indicators flashing green and strong corporate earnings on the horizon, the PSX appears set to sustain its upward trajectory in the near term. Investors are likely to stay engaged as clarity improves around structural reforms, fiscal management and sector-specific growth prospects.