📈 PSX Sways But Ends Flat Despite $2.1 Billion Current Account Surplus
KARACHI: PSX Ends Flat Despite $2.1B Current Account Surplus Boost.The Pakistan Stock Exchange (PSX) experienced a rollercoaster session on Friday as investor enthusiasm drove the KSE-100 index to intraday highs before a late-session retreat turned the day lossless.
Despite breaching the 140,500‑point threshold during morning trading, the benchmark index closed slightly lower—ultimately showing the market’s resilience amid fluctuating investor sentiment.
Institutional Buying Sparks Early Rally
The day commenced with significant strength, largely fuelled by aggressive institutional buying. Expectations surrounding strong upcoming corporate earnings further fanned market optimism.
Topline Securities reported that the index rallied nearly 1.38 percent—an uptick of approximately 1,920 points—buoyed by heavy volumes from local institutional accounts. This surge underscored renewed confidence in Pakistan’s economic outlook and corporate performance.
Midday Rally Gives Way to Profit-Taking
However, once the market consolidated, some investors shifted to profit-taking, locking in gains before the weekend. This selling pressure eroded the morning’s rally and introduced a dose of volatility to the session.
Profit-taking is a routine market response when indices climb sharply in short bursts. Traders and fund managers often liquidate positions to secure profits, driving a natural pullback—especially ahead of non-trading days.
Gainers and Losers: Stocks That Moved the Needle
Several key stocks were instrumental in shaping the day’s market dynamics:
Top Advancers
- Fauji Fertilizer
- United Bank Limited (UBL)
- Engro Holdings
- Pakistan Services
- Pakistan Aluminium Beverage Cans
- Engro Fertilizer
Collectively, these six blue-chip stocks contributed an impressive 1,052 points to the KSE-100 index—underscoring their critical role in market performance.
Key Laggards
- Systems Ltd
- Meezan Bank
- Hub Power
- National Bank of Pakistan (NBP)
- Mari Petroleum
These underperformers shaved roughly 345 points off the index, highlighting how declines in select heavyweights can counterbalance broader market strength.
Steep Intraday Swings: Volatility in Action
Ali Najib, Deputy Head of Trading at Arif Habib Ltd, observed that the PSX ended a highly volatile week. After aggressively surpassing the 140,000‑point level, the index plunged to a session low of 138,344 points—a sharp 322‑point swing.
However, a modest recovery pulled the benchmark back to 138,597, where it settled with a marginal loss of just 68 points (0.05%). The intraday journey encapsulated both investor enthusiasm and caution.
Economic Upside: $2.1 Billion FY25 Current Account Surplus
A major underpinning of Friday’s optimism was the announcement that Pakistan recorded a $2.1 billion current account surplus in FY25—a milestone reflecting the first annual surplus since 2003.
Drivers behind the surplus:
- Stringent import controls reduced the outflow of foreign exchange.
- Resilient export earnings maintained revenue momentum.
- Robust remittances from overseas Pakistanis bolstered foreign currency reserves.
- Effective external account management by the central bank and government helped stabilize balances.
This surplus is especially significant given Pakistan’s long history of deficit, and it strengthens the country’s external position and investor sentiment.
Volume and Value Decline: Market Cools Off
Despite the initial surge and surplus announcement, trading activity dropped sharply:
- Total traded volume fell by 21.86%, landing at 609.44 million shares.
- Total traded value declined by 20.89%, amounting to Rs 31.32 billion.
The most actively traded stock was Pakistan International Bulk Terminal, with 53.11 million shares exchanging hands.
What This Means for Investors & Markets
1. Profit-Taking Reflects Healthy Market Mechanics
Pullbacks after sharp gains are common. A minor retreat after a strong rally typically indicates disciplined profit management—not market dysfunction.
2. Institutional Buying Signals Confidence
Heavy participation by institutional investors usually reflects a positive outlook on corporate earnings and macroeconomic fundamentals.
3. Earnings Season Is Key
Market optimism was tied to expectations for strong quarterly corporate earnings. Positive reports could form the next catalyst.
4. Macro News Was a Boost
The current account surplus offers a tangible foundation for economic stability—potentially reducing external financing pressures and currency vulnerability.
5. Watch Key Stocks for Market Direction
Leading contributors like Engro, UBL, and fertilizer majors can shift market momentum. Declining sectors—banks, power, oil & gas—carry downside risk.
How To Stay Ahead: Strategy Tips for Traders
Here’s what market participants should consider moving forward:
- Track institutional activity as it often precedes trend shifts.
- Stay updated on earnings announcements for major listed companies.
- Monitor macroeconomic updates, including trade, remittances, and balance of payments data.
- Watch liquidity metrics—drops in volume may precede volatility or reversals.
- Follow sector-level developments, particularly in banking, energy, agriculture, and manufacturing.
Broader Context: Is the Market Set to Stabilize?
The current account surplus places Pakistan in a stronger external position—which could dampen currency volatility and pressure on foreign reserves. However, global inflation, geopolitical tensions, and domestic fiscal imbalances remain overhangs.
Local investors may need to evaluate:
- Monetary policy trajectory and upcoming central bank decisions.
- Government initiatives on industrial growth and exports.
- Institutional capacity to sustain export and remittance growth.
With improved macro conditions, investor focus may turn to corporate earnings, asset valuations, and policy reform.
Key Takeaways
- PSX held a volatile session, surging past 140,500 before closing flat.
- Heavy institutional buying fueled early gains.
- Profit-taking erased most of the rally’s momentum.
- A $2.1 billion current account surplus—the first since FY2003—provided a macro boost.
- Trading volumes and value declined, indicating cautious investor behavior.
- For now, the market remains driven by a mix of domestic optimism and macro headwinds.
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Final Perspective
Friday’s trading session on the PSX highlighted the tightrope walk that domestic markets often perform—balancing short‑term profit-making moves with longer-term economic signals. While institutional confidence propelled the index to impressive heights, profit-taking reminded investors of the need for caution. Yet, the announcement of Pakistan’s first current account surplus in over two decades adds a robust macroeconomic narrative that could define the market’s trajectory in weeks to come.
For investors and analysts, the message is clear: stay alert to earnings releases, macroeconomic updates, and shifting market liquidity trends. With the right strategic approach, the PSX may be poised for a steadier climb—especially if macro data continues to surprise on the upside.
