PSX Recovers Ground as Political Clarity and IMF Prospects Boost Investor Sentiment
The Pakistan Stock Exchange (PSX) experienced a important rebound this week, ending three weeks of consecutive losses, fueled by increased political clarity and positive developments regarding the International Monetary Fund (IMF). The benchmark KSE-100 index gained 1.26% week-on-week, closing at 161,935.19 points – a rise of 2,342.29 points.
The recovery was largely driven by renewed buying activity from mutual funds. Average daily trading volumes increased to 767 million shares, with a total traded value of Rs35.4 billion.
several factors contributed to the improved market mood. The approval of the 27th Amendment by both houses of parliament effectively reduced political uncertainty, adding 3,751 points to the index over the final two trading days of the week, according to AKD Securities. This positive shift offset earlier concerns stemming from unresolved peace talks with Afghanistan and the subsequent announcement by Kabul to suspend trade with and through Pakistan.
Macroeconomic data also provided support. Pakistan Automotive Manufacturers Association (PAMA) reported October car sales of 17,333 units, a 32% increase year-on-year and a 1% rise month-on-month. Total car sales for the first four months of FY26 reached 59,600 units, representing a considerable 46% annual increase.
The government successfully raised Rs478 billion in a T-bill auction against a target of Rs550 billion, with yields remaining relatively stable. A subsequent T-bill auction saw total participation surge to Rs1,621.7bn, with the government raising Rs492.9bn. Yields on shorter tenors saw slight adjustments: one-month and three-month maturities slipped 1.2bps and 0.6bps respectively, while the 6-month inched up 0.1bps and the 12-month remained unchanged.
Workers’ remittances increased by 12% year-on-year to $3.4 billion in October, and Roshan Digital Account (RDA) inflows reached $250 million for the month, a 4.6% increase month-on-month. As of the end of October, RDA inflows totaled $11.313 billion, with $1.903 billion repatriated and $7.263 billion utilized locally, resulting in net repatriable liabilities of $2.148 billion.
Sector-specific developments also played a role. Fertiliser stocks surged following the Economic Coordination Committee’s approval to shift plants from expensive RLNG to Mari’s indigenous gas, a move anticipated to alleviate subsidy pressures and stabilize urea prices. Cement shares also rallied on expectations of potential merger and acquisition activity.
The State Bank of Pakistan’s foreign exchange reserves increased by $21.8 million to $14.5 billion, and the rupee remained stable, closing at Rs280.723 against the dollar. Net-metering’s share in total generation rose 57bps year-on-year in September, indicating continued growth in solar energy adoption.
Looking ahead, Topline Securities and AKD Securities anticipate continued bullish momentum, driven by expectations of IMF Board approval, minimal impact from recent floods, potential improvements in credit ratings, and easing global yields. Key data releases, including current account and Foreign Direct Investment (FDI) numbers, will be closely watched.
Currently, the KSE-100 is trading at a price-to-earnings ratio of 8.18x, compared to its 15-year average of 8.59x, and offers an estimated dividend yield of approximately 6%, consistent with past norms. Analysts believe these factors could attract further foreign portfolio and direct investment, with inflows likely to arrive the following day.
