Pakistan stocks likely to reach new highs on economic optimism

The Pakistan stock market is expected to remain positive in the coming weeks, with the potential announcement of a staff-level agreement serving as a key trigger for momentum.

An analyst from AKD Securities said the KSE-100 is anticipated to sustain its upward trajectory, targeting 165,215 points by December 2025.

This growth is expected to be driven by strong earnings in fertilizers, sustained ROEs in banks, and improving cash flows of E&Ps and OMCs, benefiting from falling interest rates and economic stability.

Salman Ahmad, head of retail sales at Aba Ali Habib Securities, said the resolution of circular debt amounting to PKR 1.24 trillion has started benefiting stocks related to the oil and gas sector.

“The resolution will beef up the earnings of energy-related stocks because the government aims to lower the circular debt,” he said.

Ahmad added that Prime Minister Nawaz Sharif’s recent visit to Saudi Arabia aims to pave the way for investment, especially in Reko Diq. Any investment in Reko Diq would benefit shares pledged to the project, such as OGDC and Pakistan Petroleum Limited.

Investor sentiment strengthened further following developments that the Saudi government will provide a $100 million oil facility to Pakistan.

The earnings season also helped build momentum in select scrips, where financial results aligned with market expectations.

Ahmad said the index is expected to propel further on the back of expectations that the IMF will soon approve a $1 billion tranche, along with $1 billion under climate financing for Pakistan, bolstering reserves and stabilizing the local currency.

Another factor driving the rally is the government’s upcoming announcement to lower electricity tariffs. Any reduction, Ahmad said, would trim the cost of doing business, make exports competitive, and boost industrial activity.

An analyst from Arif Habib Ltd. expects the market to remain positive in the upcoming week.

“The market participants will be closely following developments leading up to the staff-level agreement between the IMF and the government, which is projected to keep the momentum buoyant,” the analyst said.

“The KSE-100 is currently trading at a PER of 6.4x (2025), compared to its 10-year average of 8.0x, offering a dividend yield of approximately 8.1%, compared to its 10-year average of 6.5%.”

An analyst from Spectrum Securities said the KSE-100 benchmark has gradually clawed back to its earlier January high levels, with a relatively bigger weekly advance of 2.5% in the total 7% recovery.

“Moving past 118,000 will set the stage for relatively shorter upper levels, such as 121,000, 123,000, and 126,000 in the near term, in our view,” the analyst said.

He added that third-quarter earnings will be the main focus for the market.

“GDP growth has remained dismally low, and while there are early signs of recovery, growth remains weak due to lower government spending and efforts to keep the rupee stable,” he said.

“Growth will entail a weakening rupee, falling foreign exchange reserves, and a pick-up in inflation rates.”

The analyst said the government is playing cautiously under IMF dictates and seems in no hurry to push for high GDP growth.

“Most importantly, the world’s leading economies are going through Trump-induced uncertainties related to tariffs, which have left smaller and struggling economies at a disadvantage,” he said.

Despite slow GDP growth, Pakistan’s equity market offers excellent opportunities as valuations remain relatively low in both international and historical comparisons.

The KSE-100 gained 2.5% during the week ended March 21, 2025, closing at an all-time high of 118,442 points. Trading volumes also improved by 50% to 508 million shares.

Foreign selling continued during the week, clocking in at $7.96 million, compared to a net sell of $2.61 million last week.

Currency

The Pakistani rupee remained stable against the U.S. dollar during the outgoing week, closing at 280.26 per dollar compared with the previous week’s closing of 280.23. The currency’s stability is attributed to lesser external payments and the central bank buying dollars from exchange companies.

Gold

Gold prices in the local market surged 1.53% during the week to PKR 273,319 per 10 grams, driven by higher commodity prices in the international market, where the yellow metal is trading at around $3,030 per ounce.