Karachi, May 3, 2025 – The Pakistan Stock Exchange (PSX) faced a challenging week as the benchmark KSE-100 index declined by 1.17% on a weekly basis, mainly due to rising tensions in the region.
According to a weekly market review by Topline Securities Limited, the decline in the PSX was largely driven by renewed geopolitical tensions between Pakistan and India. These tensions flared up following a cross-border attack last week, which shook investor confidence and added uncertainty to the market outlook.
In addition to political tensions, weak financial results from companies for the March quarter also impacted the PSX performance. Most earnings fell short of expectations, adding to investor concerns and prompting a cautious approach to trading.
The week also included several important economic updates. A Treasury Bills (T-Bills) auction was held where participation reached Rs1,505 billion. The government raised Rs562 billion, exceeding its Rs400 billion target, although it was less than the Rs698 billion in maturities. Yields remained mostly unchanged, except for the one-month paper, where the yield dropped by 17 basis points to 12.149%.
Another notable development was Pakistan’s Consumer Price Index (CPI) for April 2025, which recorded a modest increase of just 0.3% compared to 0.7% in the previous month. While this suggested some inflationary relief, it wasn’t enough to lift market sentiment.
However, concerns deepened after Pakistan’s trade deficit surged to US$3.39 billion in April, marking a 55% month-on-month rise and the highest monthly trade gap in three years. This worsening trade balance further dampened investor mood at the PSX.
As a result of these combined factors—rising regional tensions, weak earnings, and economic uncertainty—market activity at the PSX slowed significantly. Average daily trading volume fell by 29% week-on-week to 424 million shares, while average daily traded value declined by 6% to Rs27.5 billion.
Market watchers say that unless regional tensions ease and macroeconomic indicators improve, the PSX may continue to face headwinds. Investors are now looking ahead to upcoming budget announcements and diplomatic efforts to reduce tensions in the region.