KARACHI, July 4 (TNF): The Pakistan Stock Exchange (PSX) started the new fiscal year on a strong note, as the KSE-100 index jumped 6.1% during the week, closing at a record 131,949.06 points. The rally was driven by solid institutional buying, shifting funds from fixed-income to equities, and improving macroeconomic indicators.
Topline Securities Ltd said investors reallocated funds to equities after the Finance Act 2025-26 raised withholding tax on savings and fixed deposits to 20%, while keeping equity tax at 15%. Falling yields also supported the move.
The benchmark index gained 7,570 points over the week, up from last week’s close of 125,627.31. Average daily trading volume rose 31.4% to 967 million shares, and average traded value increased 33% to Rs41.5 billion. In dollar terms, average daily turnover climbed 31.9% to $145.7 million.
Stabilising economic indicators boosted sentiment. Inflation eased to 3.2% in June from 3.5% in May. The June trade deficit shrank 9% month-on-month to $2.3 billion. The full-year FY25 trade gap stood at $26.3 billion, up 9% year-on-year.
State Bank of Pakistan’s (SBP) reserves rose by $3.66 billion to $12.73 billion as of June 27, the second-biggest weekly increase on record. Total reserves reached $14.5 billion by June-end, meeting SBP’s target. The rupee held firm, ending at Rs283.97 per dollar, down only two paise.
Commercial banks led sector gains, adding 4,561 points to the index. Fertilisers contributed 722 points, technology and communication 438 points, exploration and production 401 points, and pharmaceuticals 187 points. Cement (-136 points), glass and ceramics (-65 points), refinery (-6 points), and woollen (-1.5 points) lagged.
Top positive contributors included United Bank (1,597 points), MCB Bank (653 points), Habib Bank (462 points), and Bank Al Habib (425 points). On the downside were Maple Leaf Cement (-44.1 points), Lucky Cement (-41 points), Ghani Glass (-39 points), and Pioneer Cement (-30 points).
Foreign investors sold equities worth $15.3 million, following $11.8 million in outflows the week before. Commercial banks ($4.5 million) and miscellaneous sectors ($4 million) saw the most selling. Local mutual funds and companies bought $22.1 million and $12.2 million, respectively.
On the regulatory front, Nepra cut power tariffs by Rs1.14 to Rs31.59/kWh, while Ogra hiked gas prices from July 1. A new levy on New Energy Vehicles raised car prices.
Cement dispatches for FY25 rose 2% year-on-year to 46.2 million tonnes, with domestic sales down 2.4% to 38.6 million tonnes. Oil marketing sector product offtake increased 7% to 16.3 million tonnes.
The KSE-100 delivered 60.15% return in FY25, outperforming T-bills (21.44%), Defence Savings Certificates (12.61%), bank deposits (12.60%), Pakistan Investment Bonds (11.97%), gold (4.52%), and the rupee (1.95% appreciation vs USD).
Arif Habib Ltd expects the rally to continue on strong sentiment, macro stability, and cheap valuations. The KSE-100 trades at a 6.8x forward P/E for 2025, below its 10-year average of 8.0x, with a 7.4% dividend yield versus a 6.5% average.
AKD Securities projected the index could hit 165,215 points by December, driven by fertiliser earnings, steady bank ROE, and stronger cash flows in oil marketing and exploration sectors as rates fall.
FY25 inflation averaged 4.5%. FY26 inflation is seen at 4.4%, creating room for further rate cuts and equity gains.
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