Karachi: The stock market in Pakistan reached unprecedented heights this week, buoyed by a landmark trade agreement with the United States and forthcoming government fiscal measures. The market closed at an all-time high of 141,035 points, marking an increase of 1,828 points, or 1.31%, over the week.
Key drivers of this upward momentum included the focus on developing Pakistan's oil reserves as part of the trade deal, and the government’s plan to disburse PkR1.3 trillion secured from commercial banks by next week. These developments significantly boosted the Exploration and Production (E and P) and Oil Marketing Companies (OMC) sectors, contributing 1,222 and 324 points, respectively, to the index.
Despite the positive close, the market saw a reduction in participation, with average daily trading volumes falling by 11.6% to 562 million shares from the previous week's 635 million shares. The beginning of the week was marked by uncertainty surrounding the Monetary Policy Committee’s decision to maintain the status quo on policy rates due to inflation concerns.
In macroeconomic news, the United States announced a reduction in tariffs on Pakistani exports, lowering them from 29% to 19%. Meanwhile, inflation slightly rose to 4.1% year-over-year for July, up from 3.2% in June. The Pakistani Rupee appreciated for the second consecutive week, ending at PkR282.72 against the U.S. dollar, aided by government efforts to curb illicit foreign exchange markets.
The State Bank of Pakistan’s foreign exchange reserves fell by US$153 million to US$14.3 billion as of July 25, 2025. The Federal Board of Revenue exceeded its target by collecting PkR755 billion, while yarn, grey cloth, and raw cotton were removed from the Export Financing Scheme purview.
Sector-wise, jute, E and P, and OMCs were the top performers, while vanaspati and allied industries, woollen, and property sectors saw declines. Notably, banks and foreign investors were net sellers, while mutual funds absorbed most of the selling.
Looking forward, analysts anticipate continued market positivity, driven by developments in circular debt and upcoming corporate results. The KSE-100 index is projected to reach 165,215 points by December 2025, spurred by strong earnings in the fertilizer sector, stable bank returns on equity, and improved cash flows in E and Ps and OMCs.