The Pakistan Stock Exchange (PSX) opened the week on a downturn, with investors engaging in profit-booking on Monday following the index’s record-breaking rally. The selling pressure was amplified by mounting concerns over fiscal slippages and widening external imbalances.
The PSX’s benchmark KSE-100 Index settled at 167,752.40 points, reflecting a loss of 1,237.67 points, or 0.73%, from the previous close of 168,990.07. During the session, the index experienced significant volatility, hitting a low of 165,997.36 points.
Economic Headwinds Drive Profit-Taking
Market analysts attributed the decline to a combination of technical resistance and fundamental economic worries.
“The market, after a phenomenal run, has now run into some selling pressure and resistance,” said Ahfaz Mustafa, CEO of Ismail Iqbal Securities. He identified the major factors prompting investors to take profits: the recent miss in FBR collection, an increasing trade deficit, and rising inflation.
Mustafa also pointed to a lack of proactive government intervention. “We have not seen any any concrete policy actions from the government to address any of these issues yet. This, coupled with excessive leverage and high leverage rates, is also causing people to take profits,” he added.
Fiscal and External Imbalances
Recent economic data released underscores the severity of the challenges facing the economy:
- FBR Revenue Shortfall: Data from last week showed the Federal Board of Revenue (FBR) collected Rs2.88 trillion in the first quarter of FY26, falling short of its Rs3.083 trillion target by Rs198 billion. September collections alone missed the monthly target by Rs138 billion, a shortfall that also missed the IMF’s more conservative target.
- Trade Deficit Widens: The overall trade deficit jumped nearly 46% year-on-year in September 2025 to $3.34 billion, according to the Pakistan Bureau of Statistics (PBS). This was driven by a 14% surge in imports and an 11.7% drop in exports.
- Quarterly Trade Gap: For the July–September quarter, the trade gap expanded by 32.9% to $9.37 billion. Economists have warned that this sustained trend will exert pressure on the rupee and foreign reserves, complicating debt repayments, given Pakistan’s critical dependence on external financing.
- Inflation Pressure: Weekly inflation, measured by the Sensitive Price Indicator (SPI), rose by 0.56% for the week ended October 2, signalling renewed price pressures after a period of relative stability.
