Karachi, June 6, 2025 – The Pakistan Stock Exchange (PSX) concluded the pre-Eid trading week on a strong note as the benchmark KSE-100 index posted a notable 1.63% weekly gain. Investor sentiment remained upbeat ahead of the federal budget for the fiscal year 2025–26, which is scheduled to be presented on June 10.
The trading week was shortened to four sessions due to Eid-ul-Adha holidays starting on Friday, June 6. However, the market maintained upward momentum throughout the week, supported by anticipation of economic reforms and budget-related optimism. The index closed confidently on Thursday, June 5, signaling increased investor participation and confidence in upcoming fiscal strategies.
According to market analysts at Topline Securities, a significant factor contributing to this bullish trend was progress on resolving Pakistan’s persistent circular debt issue. The government secured a major financial arrangement involving a loan package worth Rs 1.275 trillion with 18 commercial banks. This development marked a key milestone in stabilizing the energy sector and easing fiscal pressure.
In addition to domestic efforts, external financial support also boosted investor confidence. The Asian Development Bank (ADB) approved an $800 million loan under Pakistan’s public finance management program, further reinforcing the country’s external account position and strengthening expectations of fiscal discipline.
Despite positive market performance, macroeconomic indicators presented a mixed picture. Consumer Price Index (CPI) inflation surged to 3.5% in May, rising sharply from 0.3% recorded in April. This acceleration in inflation highlighted ongoing cost pressures in the economy, particularly in essential commodities. On the other hand, the trade deficit showed notable improvement, narrowing to $2.6 billion in May — a 23% decline from the previous month, which helped ease concerns regarding external imbalances.
As the federal budget approaches, speculation remains high over the government’s policy direction. Investors are closely watching potential tax measures, subsidy adjustments, and development expenditure allocations. Many market participants expect a mix of business-friendly initiatives and fiscal consolidation to be outlined, which could sustain the current market momentum.
Trading activity during the week reflected strong investor interest. The average daily trading volume reached 660 million shares, while the average daily traded value stood at Rs 27.8 billion. This level of activity indicates sustained participation and rising expectations from both institutional and retail investors.
The KSE-100 index’s performance ahead of the budget suggests a cautiously optimistic market outlook. While structural economic challenges remain, proactive fiscal measures, strategic partnerships, and targeted financial programs are giving investors reasons to stay engaged. The upcoming budget announcement will be a critical juncture in determining whether this momentum can be maintained, especially as Pakistan seeks to balance growth, reform, and stability in the coming fiscal year.