Karachi: The stock market in Pakistan displayed a modest gain during a week marked by a lack of significant market catalysts and the challenges of a rollover week. The Karachi Stock Exchange (KSE) 100 index rose by 610 points, closing at 139,207 points, an increase of 0.44% from the previous week. However, market participation dipped by 16.7%, with 635 million shares traded.
On the economic front, there were positive developments as S and P upgraded Pakistan's credit rating to B-, a move that came after three years. This boost in credit rating resulted in a decline in Eurobond yields by 36-61 basis points across various maturities. Additionally, the Pakistani Rupee appreciated by 0.5% against the US dollar, reaching 283.45, marking the highest weekly gain in 93 weeks.
In the latest treasury bill auction, yields fell by 39 basis points to 10.85% for the one-month paper, indicating expectations of a rate cut in the upcoming Monetary Policy Committee meeting. Analysts anticipate the State Bank of Pakistan may reduce rates by 50 basis points, citing moderating inflation and easing geopolitical tensions.
The government has also formed a task force to address the country's significant gas circular debt, proposing a plan involving commercial borrowing and a special levy to fund repayments.
Foreign exchange reserves held by the State Bank fell by $69 million, standing at $14.5 billion as of July 18, 2025. Meanwhile, the Asian Development Bank revised Pakistan's fiscal growth forecast to 2.7%. The International Monetary Fund has linked the removal of a 4% additional sales tax to a broader tax net. Foreign investors repatriated $2.2 billion in the fiscal year, reflecting no change from the previous year.
Sector-wise, Food, Transport, and Auto Assemblers recorded gains, while Vanaspati and allied industries, Woollen, and Leather sectors saw declines. In terms of investment flows, mutual funds and individual investors absorbed the bulk of the selling pressure.
Looking ahead, analysts expect the market to remain positive, with the upcoming Monetary Policy Committee and corporate results being key focus areas. The KSE 100 is projected to reach 165,215 points by December 2025, driven by strong earnings in sectors such as fertilizers, banking, and energy.