By Moaaz Manzoor
A rough start turned into a surprisingly hopeful finish for Pakistan’s stock market in October. The Pakistan Stock Exchange (PSX) faced a rollercoaster month marked by global tension and cautious trading, yet the late rally hinted that investors were regaining confidence. This turnaround reflected the improving KSE-100 Index weekly report 2025, which signaled renewed optimism in the country’s financial sector.
KSE-100 Index Sees Late-Week Recovery
The KSE-100 Index ended October at 161,632 points, dropping 3,862 points or 2.3 percent in rupees and 2.2 percent in dollar terms. The decline was mostly driven by institutional selling and weak corporate results, made worse by regional uncertainty. But a dramatic 4,899-point jump on the final trading day helped limit the monthly losses and gave the market some much-needed energy.
Economic Indicators Offer Signs of Stability
At the same time, Pakistan’s broader economy showed some encouraging signs. The State Bank of Pakistan (SBP) kept the policy rate steady at 11 percent, while foreign reserves inched up by USD 71 million, reaching USD 14.47 billion. The current account turned positive in September 2025, posting a USD 110 million surplus compared with a USD 325 million deficit a year earlier. Remittances also strengthened, rising 11 percent year-on-year to USD 3.18 billion, with total inflows in the first quarter of FY26 up 8 percent to USD 9.6 billion.
Trade Deficit Widens Despite Growth in Imports
But trade performance told a tougher story. Data from the Pakistan Bureau of Statistics showed that exports fell 11.7 percent year-on-year to USD 2.5 billion, while imports jumped 14 percent to USD 5.8 billion. As a result, the quarterly trade deficit widened to USD 9.4 billion, a 32.9 percent increase from the previous year. Meanwhile, GDP growth for FY25 stood at 3.04 percent, and public debt dropped slightly by 1 percent to PKR 77.5 trillion.
Sector Performance and Trading Trends
Market activity stayed mixed across industries. Banking, fertilizer, and technology stocks offered support to the index, while oil exploration, cement, and power companies weighed it down. Monthly trading volumes rose 7 percent to 1.43 billion shares, but traded value slipped 4.1 percent to USD 187 million. Foreign investors remained net sellers, pulling out USD 25.3 million, mainly from fertilizers and banks, while local investors—especially banks and individuals—picked up the slack.
Inflation and IMF Deal Boost Confidence
Inflation also held steady. The consumer price index increased 5.6 percent year-on-year in September and was expected to stay near that level in October, far below the 7.2 percent recorded the same month last year. Confidence grew further after Pakistan reached a staff-level agreement with the IMF for USD 7 billion under the Extended Fund Facility and USD 1.3 billion through the Resilience and Sustainability Facility. Once approved by the IMF’s board, the deal could bring in USD 1.2 billion in new funds—an outcome that analysts say could lift investor sentiment.
Analysts See Opportunity in Market Valuations
Analysts at Arif Habib Limited noted 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, and offers an attractive dividend yield of 6.2 percent. They expect inflation to average 4.6 percent in the first four months of FY26, compared with 8.7 percent a year earlier.
Speaking to this reporter, Muhammad Bilal Ejaz, a research analyst at Ismail Iqbal Securities, said the PSX “remained volatile due to border tensions,” but the sharp rebound on ceasefire news “helped limit losses.” He pointed out that the market’s 3.1 percent rally, or nearly 4,900 points, on the last day was one of the biggest single-day recoveries in months.
Adding to that, Syed Zafar Abbas, manager at Zahid Latif Khan Securities, described October as “a volatile month” that tested investors’ nerves. He said that after a 14,000-point downward correction, the market “ended the month on a strong rally, especially in banking stocks.”
Outlook for November Shows Growing Optimism
Even with geopolitical challenges and foreign outflows, the mix of stronger remittances, fiscal restraint, and renewed IMF support is giving investors a reason to stay optimistic. As November begins, many are hoping this recovery marks the start of steadier days ahead for Pakistan’s financial markets.
Author Profile
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Moaaz Manzoor is a business correspondent who meticulously tracks Pakistan’s crucial but neglected natural resource industries.
He specializes in exposing inefficiencies and charting the course of modernization, highlighting how efforts to mechanize mining have dramatically cut marble and granite wastage, driving a recovery and attracting vital investment.
