KEY POINTS
- Benchmark KSE-100 retreats nearly 3.5% week-on-week, ending a five-week winning streak.
- Broad-based profit-taking and macro uncertainty weigh on sentiment.
- Regional markets show mixed trends; global equities slip amid renewed trade tensions.
- Central bank reserves inch up; rupee trades steady in narrow range.
ISLAMABAD: Pakistan’s capital market underwent an overdue technical correction where traders opted for profit-taking, rendering the local bourse’s benchmark to lose three and a half percentage points during the week ending Friday over the preceding one.
The Pakistan Stock Exchange witnessed a sharp reversal during the week under review, slipping by nearly 3.5 per cent as investors engaged in broad-based profit-taking following an extended rally. The bearish week came after five consecutive weeks of an unprecedented bull run.
According to data released by the Pakistan Stock Exchange, the market turned lower amid persistent macroeconomic uncertainty, cautious institutional flows, and subdued global sentiment.
Key indicators revealed that the PSX is still outperforming the regional bourses, despite a week of technical correction.
Market analysts told WE News English that the correction was long expected after consecutive weeks of gains, as traders opted to secure profits while awaiting clarity on upcoming economic measures and external funding inflows.
They noted that a lack of triggers on the policy and fiscal fronts amplified investor caution. The International Monetary Fund’s recent review, ending without a Staff Level Agreement with the government of Pakistan, also kept investors on the sidelines.
The SLA, likely to be signed in Washington during the week ahead, as Finance Minister Muhammad Aurangzeb anticipated, is to unlock the second tranche of a seven-billion-dollar Extended Fund Facility.
Market breadth, volumes and activity
Data from the PSX portal revealed that selling pressure dominated throughout the week, with trading activity led by index-heavy sectors.
Volumes eased compared to the previous week as retail participation had thinned and institutions reduced exposure in cyclicals. Analysts at Arif Habib Limited observed sentiment as staying fragile, reflecting technical consolidation rather than panic-driven liquidation.
Drivers & macro context
The downward shift coincided with investor concerns over delays in Pakistan’s next IMF staff-level agreement, according to market reports cited by various media outlets.
The State Bank of Pakistan’s weekly update indicated a marginal rise in reserves, helping stabilize the rupee but offering limited support to equities.
Analysts added that the near-term direction of the market remains linked to monetary policy cues and progress on external financing commitments.
Sector synopsis
According to PSX trading data, selling pressure was visible across all major sectors — particularly financials, energy, and industrials — while defensive utilities offered limited relief.
Brokerage commentary suggested that investors are rebalancing portfolios in line with global risk trends, with focus shifting toward dividend-paying and low-volatility stocks.
Regional & international trends
Regional and global market developments further dampened sentiment. According to Reuters and Bloomberg, renewed US–China tariff rhetoric triggered weakness across global equities, with the S&P 500 and Nasdaq posting weekly losses.
In Asia, the Shanghai Composite managed modest gains on industrial optimism, while Japan’s Nikkei faced selling in exporters amid currency strength. European bourses also closed lower, tracking cautious central-bank guidance and soft macro data.
Outlook — what to watch next
Traders and Analysts were unanimous on the view that the market direction in the coming sessions will depend on the pace of IMF-related progress, macroeconomic updates, and the start of the corporate earnings season.
Any improvement in external inflows or clarity on policy measures could trigger selective recovery, though global volatility and foreign investor caution may continue to cap upside momentum through mid-October.
Local currency
Global equities ended the week under pressure as risk appetite softened across emerging markets. The rupee remained broadly stable in both interbank and open markets, supported by a modest improvement in SBP-held reserves.
However, analysts warned that external funding delays and commodity price swings could reintroduce pressure on frontier-market currencies if sentiment deteriorates further.
