PSX witnesses volatility due to rising tension between India and Pakistan

Pakistan Stock Exchange (PSX) remained volatile throughout the week ended Friday 25, 2025, as escalating geopolitical tensions post the Pahalgam attack in Indian Occupied Kashmir and India’s subsequent threats to revoke the Indus Water Treaty with Pakistan further undermined investor sentiment. The KSE-100 index closed the week at 115,469 points, losing 1,846 points, down 1.57%WoW.

Positive news stemmed from the IMF's World Economic Outlook for April 2025, lowering Pakistan's inflation forecast for FY25 to 5.1%YoY and 7.7%YoY for FY26. On the flip side, growth projection for FY25 was revised slightly downward to 2.7%, from 2.8% previously.

The news reports indicate that authorities have reached a preliminary agreement with two foreign commercial banks for a US$1 billion loan facility, at interest rate of 7.6%.

Finance Minister met with representatives from credit rating agency Moody's in an effort to improve Pakistan's credit rating, following a recent upgrade by Fitch.

PKR depreciated 0.09%WoW against the greenback.

Foreign exchange reserves held by State Bank of Pakistan (SBP) decreased by US$367 million to US$10.2 billion as of April 18, 2025.

Other major news flow during the week included: 1) Finance Minister met with IMF chief, 2) Government urged to fully deregulate wheat supply chain, 3) Cabinet recommended to abolish FED on property transfer, 4) Kuwait announced to join Pakistan offshore bids and 5) Pakistan missed wheat production target.

Vanaspati & Allied Industries, Synthetic & Rayon, and Textile Spinning were amongst the top performers, while Refinery, Jute, and Transport were amongst the laggards.

Major selling was recorded by Banks/ DFI with a net sell of US$4.0 million. Organizations and Foreigners absorbed most of the selling with a net buy of US$6.9.

Top performing scrips of the week were: NATF, FCEPL, MUREB, ATLH, and SNGP, while laggards included: BOP, PIBTL, EPCL, AGL, and HUMNL.

According to Pakistan’s leading brokerage house, AKD Securities lower oil prices and favorable standing among exporting peers amid reciprocal tariffs will support Pakistan’s economy and strengthen the outlook for a return to single-digit interest rates in CY25.

The benchmark index is anticipated to sustain its upward trajectory, primarily driven by strong earnings in Fertilizers, sustained ROEs in Banks, and improving cash flows of E&Ps and OMCs, benefiting from falling interest rates and economic stability. Top pick of the brokerage house includes, OGDC, PPL, PSO, FFC, ENGROH, MEBL, MCB, HBL, FCCL, INDU, ILP and SYS.