KARACHI: The Pakistan Stock Exchange (PSX) stayed positive during the last week ending on June 5, 2025, fueled by growing optimism over a potential agreement between Pakistan and the IMF.
The benchmark KSE-100 index rose by 1,950 points or 1.6 percent to close at 121,641 points on the last trading day of the week compared to 119,691 points at the end of the previous week. Overall four trading sessions were held due to the Eid holiday on Friday June 6, 2025. During the week under review, the index hit the all-time high level of 121,799 points on Wednesday, however, a range bound session was observed on the last trading day before the long Eid weekend.
Average daily trading volumes saw a slight dip, falling by 0.2 percent week-on-week to 660 million shares, compared to 662 million shares recorded in the preceding week.
Market capitalization also witnessed upward momentum, increasing by Rs 226 billion during the week to reach Rs 14.729 trillion, compared to Rs 14.503 trillion in the previous week.
During the last week, BRIndex100 increased by 191.74 points, closing at 13,034.25 points up from 12,842.51 points of the previous week. Daily average trading volume at BRIndex100 was 528.265 million shares. BRIndex30 also gained by 232.96 points during the week, ending at 38,028 points with average daily trading volume of 318.678 million shares. Analysts said the recent market rally was mainly due to positive expectations about a possible agreement with the IMF, as mentioned by the Prime Minister. This boosted confidence ahead of the budget announcement.
The Topline sales desk pointed out that the benchmark KSE 100 Index rose by 1.63 percent was driven by optimism about solving the circular debt issue. For this, the government has reached agreements with about 18 commercial banks for a historic loan package of Rs 1.275 trillion to clear the circular debt. Additionally, the Asian Development Bank (ADB) approved an $ 800 Million loan as part of Pakistan’s public finance program.
On the economic front, Pakistan’s Consumer Price Index (CPI) for May 2025 registered a year-on-year (YoY) increase of 3.5 percent, primarily due to the fading impact of a high base from the previous year. As a result, the average inflation for the first 11 months of FY25 (July-May) settled at 4.61 percent.
In external trade, the country’s trade deficit contracted by 23 percent on a month-on-month (MoM) basis, reaching US$ 2.6 billion in May 2025, offering some relief to the country’s external account position. On the financing side, the Asian Development Bank (ADB) announced up to US$800 million in financial support aimed at assisting Pakistan with its ongoing fiscal reforms and economic stabilization efforts.
However, on the revenue front, the Federal Board of Revenue (FBR) fell short of its collection target for the first 11 months of FY25, managing to collect Rs10.2 trillion against the target of Rs11.2 trillion, leaving a gap of Rs1 trillion to cover. Moreover, in a significant move to address the long-standing issue of circular debt in the power sector, the government, with the endorsement of the IMF, finalized a Rs 1.275 trillion financing agreement with 18 commercial banks. This step is expected to ease financial strain on the energy sector and improve liquidity in the system.
On the sector-specific front, the cement industry showed signs of recovery, with the local cement dispatches rising by 9 percent YoY in May 2025. This helped keep overall cement volumes for the first 11 months of FY25 nearly flat compared to the same period last year. Moreover, a 26 percent increase in cement exports during the first 11 months of FY25 contributed to lifting the total cement dispatch growth to 2 percent over the period.
According to Muzzammil Agar, an analyst at Arif Habib Limited, the stock market continued its strong upward momentum during the past week.
He attributed this positive performance to a combination of factors, including broad-based investor interest across the multiple sectors and a series of encouraging developments on the economic front that have collectively lifted market sentiment.
Agar explained that one of the key drivers behind this rally was Pakistan securing the International Monetary Fund’s (IMF) approval on budget-related matters, which removed a major source of uncertainty for investors. In addition, the Asian Development Bank’s (ADB) approval of an $800 million loan package further strengthened market confidence, serving as a much-needed catalyst for the rally.
Another significant factor fueling investor optimism was the government’s move to address the long-standing issue of circular debt in the power sector, which has ballooned to around Rs 1.275 trillion. The finalization of historic financing agreements with 18 commercial banks to settle these dues played a major role in restoring investor trust in the government’s ability to manage economic challenges.
Moreover, Agar noted that petroleum product sales saw a healthy 10 percent increase year-on-year, reflecting signs of improvement in economic activity. At the same time, inflation has recorded a noticeable decline compared to last year, providing additional support to market sentiment and offering a more stable economic outlook and also providing a room for the State Bank to cut interest rates further.
Copyright Business Recorder, 2025
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