Pakistan stocks to stay positive driven by strong financial results, macroeconomic improvements

Pakistan's stock market is expected to remain bullish amid anticipated strong financial results from the banking sector and government efforts to resolve circular debt, analysts said.

Salman Ahmad, head of retail investors at Aba Ali Habib Securities, said the government’s firm stance on tackling circular debt would improve the financial health of companies such as Oil and Gas Development Company (OGDC), Pakistan Petroleum Limited (PPL), Pakistan State Oil (PSO), Sui Northern Gas Pipelines and Sui Southern Gas Company.

He added that positive macroeconomic developments, including a 60-year low inflation rate of 0.7%, reduced electricity tariffs for industries and the International Monetary Fund’s approval of a $2.3 billion loan, would bolster investor confidence.

Ahmad acknowledged concerns over the recent U.S. imposition of a 29% customs duty on Pakistani textiles, which triggered a market reaction. However, he noted that competitors like China, Bangladesh and Vietnam face higher tariffs, potentially giving Pakistan’s textile sector an edge in supplying cheaper goods to U.S. consumers.

An analyst from Arif Habib Ltd. said the bullish trend is likely to continue in the coming week, with certain stocks gaining attention as the earnings season begins.

The benchmark KSE-100 index closed at 118,791 points, up 984 points, or 0.8%, week-over-week. The index trades at a price-to-earnings ratio (PER) of 6.4x for 2025, below its 10-year average of 8.0x, while offering a dividend yield of 8.2%, above the long-term average of 6.5%.

Foreign investors remained net buyers, purchasing $7.38 million worth of stocks compared to $3.92 million the previous week.

Currency Weakens Amid External Pressures

The Pakistani rupee depreciated further against the U.S. dollar, losing 24 paisas during the two-day trading week due to external payment pressures.

Foreign Reserves Position

Pakistan's total liquid foreign reserves were recorded at $15,579.7 million as of March 28, 2025, according to official figures.

The breakdown reveals that reserves held by the State Bank of Pakistan (SBP) amounted to $10,676.3 million, while net foreign reserves maintained by commercial banks stood at $4,903.4 million.

The SBP reported an increase in its reserves by $70 million during the week ending March 28, bringing its total to $10,676.3 million.

These figures underscore Pakistan's efforts to strengthen its financial position amidst evolving economic conditions.