PSX Inches Up as Investors Brace for FY26 Budget and IMF Decisions
The Pakistan Stock Exchange (PSX) ended the week of May 20–24, 2025, on a cautious but positive note, with the benchmark KSE-100 index rising 0.49% week-on-week, closing at 119,691 points. The market swung between gains and losses throughout the week as investors digested a slew of macroeconomic updates, ongoing negotiations with the IMF, and the rescheduling of the federal budget to June 10.
Volatile Sessions Mark Budget-Heavy Trading Week
The PSX began the week in the red, with the KSE-100 shedding 882 points on Monday as sentiment soured over the IMF’s delayed approval of the government’s circular debt settlement plan. However, sentiment gradually improved as the week progressed:
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Tuesday: The market edged up 112 points amid mixed trading, supported by gains in cement stocks on speculation of an upcoming real estate stimulus.
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Thursday: Following a one-day closure for Youm-e-Takbeer, the market bounced back, gaining 638 points, driven by improved investor confidence.
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Friday: The index surged another 720 points, powered by blue-chip gains in banking, oil, and fertiliser sectors as optimism around the FY26 budget grew.
Overall, the KSE-100 gained 588 points (0.49%) WoW, despite persistent foreign selling of $5.65 million, offset by strong local buying.
Key Economic Catalysts Support Market Momentum
Several key developments underpinned the market’s recovery:
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China pledged to refinance $3.7 billion in commercial loans before end-June, providing breathing room on Pakistan’s external financing front.
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The government raised Rs772 billion via T-bills, surpassing its Rs650 billion target. Cut-off yields across tenors fell by 9 to 15 basis points, indicating improved investor appetite for government securities.
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State Bank reserves rose by $70 million to $11.5 billion, while the central bank’s net FX market purchases reached $5.9 billion in the first eight months of FY25.
In the energy sector, Nepra’s approval of K-Electric’s multi-year tariff at Rs39.9/unit, with a 14% USD-based ROE, added further clarity for investors.
Sector and Scrip Performance
According to Arif Habib Limited (AHL), the positive drivers of the week included:
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Cement (+317 points)
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Fertiliser (+249 points)
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Power generation & distribution (+148 points)
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Commercial banks (+84 points)
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Refinery (+80 points)
Top-performing scrips included Meezan Bank (+230 points), Fauji Fertiliser Company (+210 points), Lucky Cement (+159 points), Pakgen Power (+80 points), and DG Khan Cement (+70 points).
On the downside, the following sectors weighed on the index:
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Automobile assemblers (-105 points)
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Oil & gas exploration (-97 points)
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Tech and communication (-53 points)
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Food & personal care (-46 points)
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Oil & gas marketing (-43 points)
Foreign Outflows Continue, Budget Remains Key Trigger
Foreign investors remained net sellers, with total outflows of $5.65 million, marking another week of cautious external sentiment. However, trading volumes were robust, with average daily volume climbing 34.6% WoW to 662 million shares, although average traded value slipped 6.5% to $78.9 million.
According to JS Research, much of the volatility stemmed from the IMF’s inconclusive visit, which forced the government to reschedule the budget presentation. Virtual talks are now focusing on tax reforms and fiscal discipline—both crucial for unlocking the next tranche of IMF support.
Meanwhile, China’s loan refinancing and the State Bank’s aggressive FX accumulation remain encouraging signs as Pakistan navigates a precarious economic phase.