PSX Opens Lower Amid Contract Expiry, Debt Fears
Uncertainty over FY26 external repayments, monetary policy direction, and rupee volatility weigh on investor sentiment
Staff Report
Islamabad: The Pakistan Stock Exchange (PSX) opened the week in the red as the benchmark KSE-100 index shed 379.78 points, or 0.27%, to close at 138,217.58 on Monday. The dip followed investor profit-taking ahead of July-end futures contract expiry and growing anxiety over external debt repayments expected in FY26.
Market participants also kept a close watch on macroeconomic developments, including the upcoming monetary policy decision, rupee depreciation, and lingering geopolitical tensions in the Middle East. Analysts said the combination of fiscal uncertainty and inflationary pressures created a risk-off mood across the bourse.
According to Ahsan Mehanti of Arif Habib Corp, “Stocks closed under pressure amid geopolitical uncertainty and concern over the impact of inflation on the SBP’s monetary policy next week.” He added that rupee instability and external debt concerns intensified bearish sentiment.
Key Index Movers: Fertiliser, Banking, and Energy Stocks
Market breadth remained weak, with 245 stocks closing lower against 193 gainers. Major pressure on the index came from blue-chip counters including Fauji Fertiliser Company (FFC), United Bank Limited (UBL), Oil and Gas Development Company (OGDC), Hub Power and Systems Limited, which collectively dragged the benchmark down by 438 points, according to Topline Securities.
On the upside, Habib Bank Limited (HBL), Engro Fertilisers and Pakistan Aluminium Beverage Cans (PABC) provided limited support, contributing a net gain of 152 points. PABC saw a notable gain of 5.47%.
Arif Habib Limited (AHL) highlighted that the index pulled back into its support range of 137,200–138,200 points, with resistance seen near 139,500. “If the index breaks below 135,000, it may slide toward 132,000 before valuations and monetary policy cues potentially restore buying interest,” said AHL’s Deputy Head of Trading Ali Najib.
Volumes Stay Flat, Foreigners Turn Net Sellers
Trading volume stood at 608.2 million shares, slightly lower than Friday’s 609.4 million, with a total traded value of Rs23.5 billion. First Prudential Modaraba led volumes with 58.7 million shares, closing up by Rs0.48 at Rs4.98. K-Electric followed with 53.2 million shares traded, gaining Rs0.12.
Foreign investors remained on the sell side, offloading equities worth Rs815.8 million, according to data from the National Clearing Company of Pakistan Limited (NCCPL).
Policy Jitters and External Talks Add to Caution
The market’s caution is also being reinforced by ongoing trade discussions between Pakistan and the United States. Finance Minister Muhammad Aurangzeb has reportedly met U.S. officials in Washington to negotiate terms ahead of an August 1 deadline, with trade facilitation and economic cooperation on the table. Though optimism surrounds the talks, investors are watching for any conditionalities that could emerge in light of IMF recommendations.
Meanwhile, June power generation data offers a mixed signal. According to AHL, Pakistan generated 13,744 GWh in June 2025, up 2.1% year-on-year and 8% month-on-month, indicating marginal industrial and economic activity recovery—yet not enough to override investor caution.
JS Global analyst Muhammad Hasan Ather noted that despite a strong start, intraday selling erased early gains. “The index saw a volatile session amid investor caution. After last week’s 3.2% rally, driven by macroeconomic optimism and strong earnings, some pullback was expected,” he said.
Eyes on Monetary Policy, Earnings
With the State Bank of Pakistan set to announce its monetary policy in the coming week, market participants expect consolidation around current levels. Key drivers for sentiment will include clarity on the interest rate outlook, upcoming corporate earnings, and foreign portfolio inflows.
While the broader economic picture shows signs of gradual improvement—such as improving electricity demand and declining inflation—traders remain wary of the external account situation and global headwinds. As a result, sideways trading with selective accumulation is expected to dominate the short-term outlook.
