KARACHI: The stock market extended its record-setting run in the outgoing week, with the benchmark KSE-100 index nearing the 170,000 milestone, buoyed by strong investor interest despite the International Monetary Fund (IMF) signalling concerns during the ongoing second review under the $7 billion Extended Fund Facility.
The index gained 6,733 points or 4.15pc on a weekly basis to settle at 168,990, according to data compiled by Arif Habib Ltd. The rally was primarily driven by continued buying by mutual funds and individual investors, supported by limited returns on fixed-income instruments and optimism around macroeconomic indicators.
The IMF, while acknowledging progress in fiscal consolidation and structural reforms, highlighted persistent vulnerabilities in the external account. The Fund emphasised the need for sustained reforms amid high inflation and external debt challenges. Markets remain closely attuned to the review’s outcome, which is critical for the release of the next $1.2bn tranche.
Investor sentiment was further buoyed by a high-profile meeting between Prime Minister Shehbaz Sharif and US President Donald Trump in Washington, interpreted by analysts as a signal of improving international engagement. AKD Securities noted that despite a 19.8pc drop in market participation, confidence remained intact, with average daily volume reaching 1.8bn shares and value at Rs72bn.
KSE-100 index rises over 6,700 points to 168,990 in a week
On the macroeconomic front, inflation rose to 5.6pc year-on-year in September, up from 3pc in August — the highest level in 10 months. Analysts attributed the rise partly to post-flood effects and supply-side pressures.
In the government’s latest T-bill auction, yields increased across all tenors — one-month (up 41bps), three-month (20bps), six-month (21bps), and 12-month (19bps). The State Bank raised Rs730.4bn against a target of Rs750bn, with total participation at Rs1.49tr, indicating robust demand amid expectations of a stable policy rate in the near term.
Pakistan’s trade deficit widened to $3.3bn in September, up 46pc year-on-year and 16pc month-on-month. This took the 1QFY26 trade gap to $9.4bn — a 33pc increase from the same period last year. September exports stood at $2.5bn, down 11.7pc year-on-year, while imports rose to $5.8bn, up 14pc.
Foreign exchange reserves rose slightly to $19.80bn, including SBP-held reserves of $14.40bn, with the rupee appreciating marginally by 0.03pc to close the week at Rs281.37 against the dollar.
Sector-wise, cement dispatches totalled 4.25m tonnes in September, up 7.05pc year-on-year, driven by a 14pc rise in domestic demand. First-quarter FY26 dispatches reached 12.16m tonnes, up 16.3pc from 10.46m tonnes in the same period last year.
Petroleum sales rose 8pc year-on-year in September to 1.37m tonnes, led by higher demand for petrol and high-speed diesel. However, furnace oil volumes declined due to a reduction in power generation usage. Total petroleum sales in 1QFY26 rose 6pc to 3.89m tonnes.
In the fertiliser segment, urea sales rose 17pc year-on-year to 429,000 tonnes in September, while DAP sales fell 47pc to 71,000 tonnes, reflecting weak farm economics and lower imports.
The KSE-100 index is currently trading at a forward price-to-earnings ratio of 8.5x for 2026, slightly below its 15-year average of 8.59x. Dividend yields remain attractive at around 6pc, close to the long-term average.
Brokerages expect the upward momentum to continue if the IMF review concludes smoothly and global credit agencies maintain their improved outlook on Pakistan. Limited alternative investment avenues and attractive equity valuations are likely to keep investor interest intact in the near term.
