PSX drops 1.6% on Pakistan-India tensions

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KARACHI:

The Pakistan Stock Exchange (PSX) endured a turbulent week as the KSE-100 index lost 1,846 points (-1.6% week-on-week – WoW) to close at 115,469 amid heightened geopolitical tensions between Pakistan and India. Early-week optimism driven by strong economic indicators faded as investors turned cautious.

On a day-on-day basis, the PSX on Monday closed bullish as the benchmark KSE-100 index surged 1,068 points on robust results amid speculation ahead of major corporate earnings announcements during the week.

On Tuesday, the bourse held its ground over cautious sentiment. The KSE-100 index posted a marginal gain of 47 points, settling at 118,430, as late-session profit-taking offset early optimism driven by the International Monetary Fund (IMF)-related news.

The next day, the market registered a sharp downturn of 1,204 points to 117,226, marking a clear reversal in sentiment after a four-day rally. Investor confidence waned as the IMF and the World Bank lowered Pakistan’s GDP growth forecast and geopolitical uncertainties between India and Pakistan came back into focus, prompting a shift towards caution and profit-booking.

On the second last day of the trading week, the PSX nosedived 2,206 points and settled at 115,020 as escalating border tensions between Pakistan and India sparked intense investor anxiety. However, the index ended the trading week on a bullish note on Friday with a gain of 450 points, fuelled by improvement in investor sentiment following the United Nations call for Pakistan and India to exercise maximum restraint and pursue resolution through mutual engagement.

Arif Habib Limited (AHL), in its weekly commentary, wrote that the KSE-100 index exhibited mixed trends during the outgoing week, initially continuing its upward trajectory driven by encouraging economic indicators. However, the momentum weakened later in the week as geopolitical (India-Pakistan) concerns came to the forefront.

On the macroeconomic front, AHL said, banking sector deposits recorded a healthy growth of 11.7% year-on-year (YoY) in March 2025. However, the State Bank’s foreign exchange reserves dropped $367 million to $10.2 billion.

With the geopolitical noise and cautious investor sentiment, the benchmark KSE-100 index closed the week at 115,469, reflecting a decline of 1,846 points, or 1.6% WoW.

Sector-wise, the negative contribution came from exploration & production (594 points), commercial banks (295 points), technology (188 points), power (140 points) and pharmaceutical (116 points). Meanwhile, the sectors that contributed positively were fertiliser (162 points), food (74 points) and automobile assembler (23 points). Stock-wise, the negative contributors were UBL (507 points), Mari Petroleum (369 points), Engro Fertilisers (225 points), PSO (181 points) and Pakistan Petroleum (151 points).

Similarly, among individual stocks, the positive contribution came from Fauji Fertiliser Company (403 points), Meezan Bank (237 points), MCB Bank (120 points), SNGPL (78 points) and National Foods (54 points). Foreigners’ buying was witnessed during the week, which came in at $2.09 million compared to net selling of $4.01 million last week. Major buying was witnessed in oil marketing companies ($2.7 million), followed by E&P firms ($1.1 million). Average daily volumes arrived at 599 million shares (down 32% WoW) while average traded value settled at $104 million (down 10%), AHL said.

Among other major news, profit repatriation jumped to $1.72 billion in July-March FY25, IT exports surged 23% in Q3FY25, food exports increased to $5.75 billion in July-March, Pakistan received $555 million in external financing and Ghani Chemical began operations with a daily production capacity of 275 tons.

Wadee Zaman of JS Global wrote that the KSE-100 index dropped 1,846 points (-1.6%) WoW to 115,469 as sentiment turned negative in the latter half of the week owing to rising geopolitical uncertainty between Pakistan and India. Despite the decline, average volumes rose 31% WoW to 599 million shares.

Political tensions also flared up domestically as disputes over the canal project between Sindh and Punjab led to disruptions, including the blockage of key transportation routes. The IMF revised Pakistan’s GDP growth forecast downward to 2.6%, notably lower than the government’s projection of 3.6%. Furthermore, the Foreign Economic Assistance Report revealed that Pakistan secured $12.5 billion in foreign loans during 9MFY25, falling short of the annual target of $19.2 billion.

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