RECORDER REVIEW

KARACHI: The Pakistan Stock Exchange (PSX) ended the week on a subdued note as early optimism over easing geopolitical tensions was overshadowed by profit-taking, weak quarterly results in the banking sector, and caution ahead of the futures rollover week.

The benchmark KSE-100 Index lost 0.3 percent week-on-week, closing at 163,304 points, despite reaching an intraday high of 168,414 points earlier in the week following a regional ceasefire breakthrough between Pakistan and Afghanistan.

Investor confidence initially improved after the Doha agreement between the two neighbouring countries, which was viewed as a step toward regional stability and potential economic cooperation. However, profit-booking emerged in subsequent sessions, particularly in blue-chip banking and cement stocks, as market participants opted for risk aversion in the absence of fresh triggers.

Analysts noted that the KSE-100 Index experienced heightened volatility throughout the week, with strong upward momentum in the opening sessions giving way to consolidation later on. Selling pressure intensified after disappointing September-quarter earnings announcements from major banks, including Bank Al Habib (BAHL), Bank Alfalah (BAFL), Habib Bank (HBL), and Meezan Bank (MEBL), which came in below market expectations due to higher-than-anticipated operating expenses.

Topline Securities also noted that KSE 100 Index closed flat on WoW basis, taking a break from its upward momentum, which can be accredited to selling by mutual funds on rumoured redemption during the week as evident from National Clearing Company data and profit taking by investors as September result announcement for main board came in.

The KSE-100 Index registered its weekly low at 163,041 points, while the total market capitalization decreased by 0.8 percent, from Rs 18.96 trillion to Rs18.81 trillion, equivalent to US$66.95 billion. The average daily trading volume dropped 18.8 percent to 1.48 billion shares, down from 1.83 billion shares in the preceding week, and the average daily traded value declined 10.6 percent to Rs 49.66 billion.

According to analysts, the negativity in the latter part of the week was primarily driven by off-late selling by mutual funds, profit-taking on result announcements for the September quarter, and upcoming futures rollover.

On the economic front mixed signals remain in limelight. The International Monetary Fund (IMF) cautioned that the economic fallout from recent floods could be more severe than initially estimated, posing risks to Pakistan’s growth, inflation, and current account outlook.

Meanwhile, the current account recorded a US$110 million surplus in September 2025, narrowing the 1QFY26 deficit to US$594 million, compared to a deficit of US$1.13 billion during the same period last year. However, foreign direct investment (FDI) decreased 34 percent year-on-year to US$569 million, indicating a slowdown in new capital inflows, while profit repatriation rose sharply by 85.8 percent YoY to US$752 million, reflecting increased dividend outflows by multinational corporations.

Moreover, the government was considering a three-year power tariff relief package aimed at supporting agricultural and industrial consumers. The proposed scheme would reduce electricity tariffs on incremental consumption from Rs38/kWh for agriculture and Rs34/kWh for industry to Rs22.98/kWh, providing relief to key sectors and stimulating production.

In a positive development, IT exports rose 25 percent year-on-year to US$366 million in September 2025, bringing total first-quarter FY26 exports to US$1.1 billion, a 21 percent YoY increase, driven by stronger demand from the U.S. and Middle Eastern markets. Additionally, the State Bank of Pakistan’s (SBP) foreign exchange reserves inched up USD14 million to USD14.55 billion, providing some stability to the external account.

Sector-wise, the market exhibited a mixed performance. Oil & gas exploration companies, oil marketing companies, and chemicals posted gains, while commercial banks, cement, and power generation & distribution came under selling pressure.

Trading activity remained concentrated in a few key sectors. The technology & communication sector dominated turnover, accounting for 23 percent of total weekly volumes, followed by Power Generation (19 percent), commercial banks (13 percent), and investment banks (9 percent).

Among the leading performers, Pakistan Stock Exchange Ltd. (PSX) emerged as the week’s top gainer, surging 14.1 percent, supported by strong investor interest following expectations of enhanced trading activity and improved earnings outlook. Airlink Communications Ltd. followed with a 12.2 percent gain, reflecting robust quarterly performance. Other notable gainers included Pakistan Services Ltd. (+10.8 percent), National Foods Ltd. (+10.8 percent), Searle Pakistan Ltd. (+8.4 percent), and Service Industries Ltd. (+7.5 percent).

On the flip side, K-Electric Ltd. led the losers’ list, plunging 23.8 percent, amid sustained selling pressure and weak investor sentiment following regulatory uncertainty over tariff adjustments. Pakgen Power limited declined 14.4 percent, KAPCO fell 8.1 percent, Bank Al Habib (BAHL) dropped 7.5 percent, Fauji Foods Ltd. (FFL) lost 7.2 percent, and Glaxo Smith Kline Pakistan Ltd. shed 6.9 percent.

Analysts concluded that while the PSX began the week on a strong note following the ceasefire announcement between Pakistan and Afghanistan, the momentum faded as investors opted to book profits and reposition ahead of the futures rollover. The pressure was compounded by weaker earnings from major banks, subdued foreign inflows, and muted institutional participation.