PSX holds steady; investors eye policy rate, flood impact

KARACHI: The stock market remained largely range-bound during the outgoing week as investors balanced encouraging macroeconomic indicators against concerns over monetary policy and flood-related disruptions. Analysts said profit-taking dominated amid muted institutional flows, leaving the KSE-100 index nearly flat.

Topline Securities reported that the benchmark index inched up 0.11 per cent week-on-week, supported earlier by momentum from mutual funds but capped later as inflows slowed. Average daily trading volume stood at 1.1bn shares, while value traded averaged Rs52bn.

Arif Habib Ltd (AHL) said the KSE-100 closed at 154,440, gaining 163 points or 0.1pc. Sentiment was shaped by remittances, auto sales and debt data, alongside news of Pakistan’s plan to issue its first-ever Panda Bond worth $250m with guarantees from ADB and AIIB.

Remittances in August reached $3.14bn, up 7pc year-on-year from $2.9bn but down 2pc month-on-month. Cumulatively, inflows during July-August FY26 rose to $6.4bn. Auto sales also picked up, with Pakistan Automotive Manufacturers Association (PAMA) reporting 14,050 units sold in August — up 27pc month-on-month and 62pc year-on-year. In 2MFY26, sales surged by 45pc to 25,100 units.

Benchmark index edges up 0.1pc as remittances, auto sales, and debt data shape sentiment

Meanwhile, the government debt rose to Rs77.9tr in June, an increase of Rs1.84tr (2.4pc) from May’s Rs76tr. From September 2020 to August 2025, total net investments through Roshan Digital Accounts (RDA) reached $1.53bn. The State Bank’s reserves improved marginally to $14.3bn, up $34m week-on-week, while the rupee closed almost unchanged at 281.56 against the dollar.

AKD Securities stated that the market started the week on a strong note, buoyed by corporate results and Chinese President Xi Jinping’s commitment to fast-tracking CPEC 2.0. However, optimism faded on cautious trading ahead of the monetary policy announcement scheduled for Sept 15.

Government bond yields showed mixed movement in the last PIB auction, with 10- and 15-year yields falling 11bps and 7bps to 12.04pc and 12.38pc, while the 2-year yield rose 11bps to 11.20pc.

Sectoral performance was uneven: leasing companies, tobacco and engineering stocks outperformed, gaining 17.1pc, 9.2pc and 7.5pc week-on-week, respectively, while jute, property and vanaspati sectors slipped by 6.3pc, 6.2pc and 5.1pc. Among notable movers, Lotte Chemical gained 18.3pc, Pakistan Tobacco 11.4pc, Mughal Steel 9.1pc, Avanceon 8.7pc and Lucky Core 8.1pc. The laggards included Bank of Punjab (down 9.5pc) and National Foods (down 8.1pc).

Flows reflected selective buying. Companies led net purchases of $11.9m, while foreigners and other organisations offloaded $8.4m and $3.7m, respectively.

Other macroeconomic developments included FBR’s plan to raise the tax-to-GDP ratio to 18pc, a 13pc year-on-year decline in exports to the US in August, $601m worth of agricultural joint ventures signed with China, and the government’s plan to abolish cross-subsidies and peak rates in industrial tariffs.

AHL noted the KSE-100 is trading at a forward price-to-earnings ratio of 7.8x for 2026 against its 15-year average of 8.6x, offering a dividend yield of around 5.8pc versus the historical 6.1pc.

Looking ahead, analysts expect sentiment to hinge on the policy rate decision and updates on the IMF review. AKD Securities projects the index could touch 165,215 points by December, supported by strong earnings from fertiliser, banking and energy companies, improving cash flows for E&Ps and OMCs, and easing interest rates.

Published in Brackly News, September 14th, 2025