ISLAMABAD, November 2 (Wealth Pakistan): The Pakistan Stock Exchange (PSX) closed October on a cautious note, navigating through a volatile month marked by global uncertainty and local market corrections. Despite a weak start, the month ended with a strong recovery that helped limit overall losses.
Market Performance
The benchmark KSE-100 Index settled at 161,632 points, posting a month-on-month decline of 3,862 points or 2.3 percent in rupee terms and 2.2 percent in dollar terms. The bearish tone stemmed from institutional selling and fund outflows amid geopolitical tensions and below-par corporate earnings. However, a sharp 4,899-point rally on the final trading day helped cushion the decline.
Monetary and External Indicators
During the month, the State Bank of Pakistan (SBP) maintained the policy rate at 11 percent, while foreign exchange reserves rose by USD 71 million to USD 14.47 billion. The current account showed a USD 110 million surplus in September 2025, compared to a USD 325 million deficit in the previous month, indicating improved external balances.
Remittances increased 11 percent year-on-year to USD 3.18 billion, while cumulative inflows for the first quarter of FY26 grew 8 percent to USD 9.6 billion.
Trade and Economic Trends
Trade indicators, however, remained under pressure. According to the Pakistan Bureau of Statistics, exports stood at USD 2.5 billion, down 11.7 percent year-on-year, while imports surged 14 percent to USD 5.8 billion. This pushed the quarterly trade deficit to USD 9.4 billion, up 32.9 percent from a year earlier.
Meanwhile, GDP growth for FY25 stood at 3.04 percent, and central government debt eased 1 percent month-on-month to PKR 77.5 trillion.
Sectoral Performance
The Banking, Fertilizer, and Technology sectors contributed positively to the index, while Exploration & Production, Cement, and Power dragged it down. Trading volumes rose 7 percent month-on-month to 1.43 billion shares, though traded value slipped 4.1 percent to USD 187 million.
Foreign investors remained net sellers, with outflows of USD 25.3 million mainly from Fertilizer, E&P, and Banking stocks, while local investors, including banks, individuals, and companies, stepped in as buyers.
Inflation and IMF Outlook
On the macro front, inflation stood at 5.6 percent year-on-year in September and is expected to remain around the same level in October, significantly below the 7.2 percent recorded in October 2024.
The IMF Staff-Level Agreement under the USD 7 billion Extended Fund Facility (EFF) and the USD 1.3 billion Resilience and Sustainability Facility (RSF) is expected to unlock around USD 1.2 billion in inflows after Executive Board approval. Analysts expect this development to bolster investor confidence in the coming months.
Market Valuation and Outlook
Arif Habib Limited reported that the KSE-100 Index is trading at a price-to-earnings ratio of 7.9x for 2025, below its 15-year average of 8.6x, offering a dividend yield of around 6.2 percent. The brokerage expects average inflation at 4.6 percent during the first four months of FY26, compared to 8.7 percent in the same period last year.
Muhammad Bilal Ejaz, Research Analyst at Ismail Iqbal Securities, told Wealth Pakistan that the PSX remained volatile amid border tensions but rebounded strongly on ceasefire optimism. He said the market’s 3.1 percent (around 4,900 points) recovery on the final day helped limit monthly losses.
Syed Zafar Abbas, Manager at Zahid Latif Khan Securities, described October as a volatile month, adding that the market corrected by 14,000 points before rebounding strongly, especially in the banking sector.
Overall, despite global uncertainty and foreign outflows, improving remittances, fiscal discipline, and the IMF agreement indicate a steadier macroeconomic outlook that could lift investor sentiment in November.