KEY POINTS
- Market capitalization surged past Rs 18.5 trillion,
- Banks, energy, and cement sectors led gains,
- Analysts warned external shocks could cap momentum despite optimism.
ISLAMABAD: Pakistan’s bourse closed the week ended Friday in bullish tone after the geopolitical development and well-performing blue chips, when the benchmark improved by over a couple of percentages with cautiously optimistic outlook ahead.
The Pakistan Stock Exchange (PSX) registered improvement at the end of the outgoing week with the benchmark KSE-100 index gaining 2.3 percent. The market continued its upward march, reaching new highs amid renewed investor confidence.
Market sentiment was largely buoyed by policy stability and improving macro signals, with participants shrugging off external account concerns for the time being. The Strategic Mutual Defense Agreement signed with the Kingdom of Saudi Arabia also had a positive impact on the sentiment.
Market capitalization surged to historic levels while average daily turnover also posted a robust rise, underscoring the depth of activity across equities.
According to official PSX data, overall traded volume reached nearly eight billion shares during the week, with the total value crossing Rs 250 billion. Market capitalization stood at an unprecedented Rs 18.5 trillion by the weekend, reflecting broad-based gains across sectors.
Daily performance snapshot
The week opened on a firm footing on Monday, with investors responding positively to clarity on interest rate policy. Tuesday saw follow-through buying led by banking and energy stocks, while mid-week trading on Wednesday reflected some profit-taking, still maintaining a bullish tone.
Thursday rallied strongly on renewed foreign inflows and local institutions’ buying, before the market consolidated on Friday to lock in gains ahead of the weekend.
Drivers and Context
Analysts told Dawn that a mix of policy continuity and strong sectoral numbers provided support. The State Bank’s decision to hold the policy rate at 11 percent was interpreted as a cautious stance to protect growth while containing inflation.
Market players also pointed to upbeat energy generation figures, showing an 8 percent rise year-over-year alongside an 18 percent drop in costs, as a positive input.
At the same time, export numbers—particularly in the IT sector, which posted double-digit growth—lifted sentiment, while the announcement of a Saudi-Pakistan defense agreement added a political boost.
However, concerns persisted over the country’s widening current account deficit and sharply lower foreign direct investment, which fell more than 40 percent over the previous year, according to data cited by Business Recorder.
Risks and things to watch
Traders cautioned that external vulnerabilities remain the biggest risk. The widening deficit, declining FDI, and continuing reliance on remittances could constrain the sustainability of the rally.
Rising global oil prices and the prospect of higher US interest rates also pose challenges, with economists telling The News that any reversal in foreign flows could quickly change the market’s direction.
Performers and sector moves
The financial sector led the charge, with major banks recording strong volumes. Oil and gas companies registered capital gain on the back of higher crude prices, while cement stocks benefited from expectations of infrastructure activity.
Among individual names, Bank of Punjab (BOP) and Oil and Gas Development Company (OGDC) featured prominently in turnover tables, while consumer staples also showed resilience during mid-week trading.
Regional and international context
Regionally, most Asian markets posted mixed results as Chinese equities remained under pressure, while Indian benchmarks notched gains after foreign fund inflows. In this backdrop, the PSX’s continued bullish streak stood out, with brokerage houses noting that Karachi’s bourse has outperformed regional peers in recent weeks, thanks to a combination of domestic liquidity and policy clarity.
Week ahead
Looking ahead, analysts expect momentum to continue into next week if macroeconomic indicators remain in a steady trend and global commodity markets do not flare up towards volatility. Corporate earnings disclosures will be a key driver, with traders watching financials and energy as probable outperformers. While optimism persists, dealers told Reuters that vigilance on external accounts will remain critical, as any deterioration could swiftly cap gains.
