PSX benchmark index posts 6.08%WoW decline

Pakistan Stock Exchange (PSX) trended negative throughout the week, some recovery was observed during the final trading session. The benchmark index declined by 6,939 points or 6.08%WoW to close at 107,175 level on Friday, May 09 2025.

Notably, Thursday saw the largest single-day decline in the index's history, when the index plunged by 6,482 points or 5.89% amid heightened concerns over regional instability between the two neighboring countries.

On Friday the index recovered 3,648 points or 3.52% on the expectation of the approval of a US$1.0 billion tranche under the first review of the EFF program by the IMF’s Executive Board.

On the macro front, the central bank reduced policy rate by 100 bps to 11%. Workers’ remittances continued their strong trend, rising to US$3.2 billion for April 2025, up 13%YoY).

The budget deficit for 9MFY25 was recorded at PKR3.0 trillion, with the primary balance posting a surplus of PKR3.5 trillion for the same period.

IMF's Executive Board has approved the US$1.0 billion tranche under the first review of the EFF program, alongside approving the new RSF program of US$1.3 billion.

Average daily traded volume was recorded at 508 million shares as compared to 424 million shares a week ago, up 20%WoW).

Foreign exchange reserves held by State Bank of Pakistan (SBP) reserves rose by US$118 million to US$10.3 billion as of May 02, 2025.

Other major news flow during the week included: 1) India cut water supply to Pakistan from Baglihar Dam on Chenab River, 2) Cement sales for April 2025 were recorded at 3.34 million tons, up 8%YoY, 3) S&P Global forecasted more rate cuts in Pakistan, 4) OMC sales in April 2025 increased by 32%YoY, and 5) GoP raised PKR299 billion through PIB auction.

Vanaspati & Allied Industries, Sugar, and Synthetic & Rayon were amongst the top performing sectors, while Transport, Chemical, and Refinery were the laggards.

Major selling was recorded by Mutual Funds and Individuals with a net sell of US$34.9 million. Banks, Companies and other organizations absorbed most of the selling with a net buy of US$31.0 million.

Top performing scrips of the week were: NESTLE, JDWS, IBFL, and MUREB, while laggards included: AGL, SEARL, PTC, and PSX.

According to AKD Securities, market appears to have overreacted to the ongoing escalations, as the development of nuclear capability has significantly reduced the likelihood of full-scale war. The same has been witnessed during escalations since both nations attained nuclear deterrence. During past escalation periods post-nuclear capability, the market has posted an average return of positive 3%. Meanwhile, in 3 months following de-escalation, the market has historically delivered an average return of +5%.

The brokerage house expects the market to rebound with de-escalation of ongoing geopolitical tensions, alongside approval of a US$1.0bn tranche under IMF’s EFF program and US$1.3 billion under new arrangement of RSF.

The brokerage house maintains an ‘Overweight’ stance on Banks, E&Ps, Fertilizer, Cement, OMCs, Autos, Textile, and Technology sectors, as these stand to benefit from monetary easing, structural reforms and reciprocal tariffs.