KARACHI: The Pakistan Stock Exchange (PSX) closed a turbulent week with the benchmark KSE-100 Index losing 1,355 points week-on-week (WoW), settling at 114,114, as escalating tensions between Pakistan and India overshadowed positive economic indicators and upcoming IMF developments.
The week was marked by wild swings, including a sharp 3,546-point plunge on Wednesday — the worst single-day drop in recent months — triggered by fears of a regional conflict and policy rate uncertainty. However, markets partially recovered by Friday, gaining 2,787 points in a single day on signs of de-escalation, record-low inflation data, and optimism around the May 9 IMF board review.
April’s inflation slowed dramatically to 0.28% year-on-year — the lowest in Pakistan’s recorded history — bringing the 10-month average for FY25 to 4.73%, compared to 25.97% in the same period last year. Despite this, investor sentiment remained subdued, with average trading volumes falling 29% WoW and foreign investors offloading $6.8 million worth of equities, mostly in commercial banks and energy stocks.
Daily market performance remained highly reactive to political and economic news:
- Monday: The KSE-100 dropped 1,405 points (1.22%) to 114,063 amid rising regional tensions.
- Tuesday: Optimism over the IMF meeting and signs of easing tensions drove a rebound, with the index climbing 808 points (0.71%) to 114,872.
- Wednesday: Market panic set in, resulting in a 3,546-point (3.09%) crash to 111,326, as fears of military escalation and monetary policy uncertainty spooked investors.
- Friday: Following the May Day holiday, markets rebounded sharply by 2,787 points (2.5%) to close at 114,114, buoyed by hopes of rate cuts, IMF support, and stabilizing regional dynamics.
According to JS Global’s Syed Danyal Hussain, falling global oil prices contributed to a Rs2/litre cut in local petrol and diesel prices, offering some relief to consumers.
Meanwhile, the IMF confirmed it would consider Pakistan’s request for a $2.3 billion package — including $1.3 billion under the Resilience and Sustainability Facility — during its May 9 board meeting. However, concerns persist as Pakistan’s tax revenue fell short by Rs833 billion in the first 10 months of FY25, exceeding the IMF’s shortfall threshold by Rs193 billion.
In a move to curb costs, the government also announced a significant downsizing of its power procurement plans from 14,000MW to 7,000MW, potentially saving Rs4.7 trillion.
A report by Arif Habib Limited noted that ongoing geopolitical uncertainties weighed heavily on investor confidence throughout the week, but the IMF developments and record-low inflation helped cushion losses.
In the latest T-bill auction, the SBP raised Rs562 billion, beating the target of Rs400 billion, while the one-month tenor cut-off yield declined by 17 basis points, reflecting expectations of monetary easing.
Despite Friday’s recovery, the overall market closed the week down 1.2%, with sector-wise declines led by:
- Exploration & Production: -474 points
- Cement: -289 points
- Pharmaceuticals: -258 points
- Fertiliser: -256 points
- Automobiles: -129 points
Foreign investors were net sellers of $6.8 million this week, reversing a net inflow of $2.09 million recorded the previous week.
With the SBP’s Monetary Policy Committee meeting scheduled for May 5, markets will be closely watching for a potential 50bps rate cut — a decision that could either stabilize or further shake investor confidence amid a fragile geopolitical and economic landscape.
