Market Wrap: Highlights of the day - By JS Research

May 12 2025

JS Global Capital

• The KSE-100 Index roared back to life, with the benchmark index surging 9.5% to 117,327 points, marking a record 10,153-point intraday gain. Investors responded with aggressive buying as tensions between Pakistan and India eased following a ceasefire agreement, while the IMF’s approval of crucial funding further boosted confidence. With monetary easing and improved trade relations, bullish sentiment prevails. Going forward, sustained stability and policy reforms could extend gains, though external risks remain a key watchpoint for market direction

Economy: Ceasefire Ignites Investor Confidence in PSX - By Insight Research

May 12 2025

Insight Securities

• The Pakistan Stock Exchange (PSX) experienced a market-wide trading halt today as the KSE-100 Index skyrocketed by 9,475 points (+8.84%) to close at 116,650.12, triggering the index-based halt mechanism on the upside. The rally was driven by a powerful combination of regional peace prospects, fresh IMF disbursements, and improving global trade sentiment following the resolution of the U.S.-China tariff standoff.

• The Directors General of Military Operations (DGMOs) of both nations met today at 12:00 PM to formalize and reinforce the recently agreed ceasefire.

• The diplomatic engagement is being seen as a major de-escalation step, improving regional security outlook and investor sentiment.

Pakistan Economy: PSX finds its wings - By Insight Research

May 12 2025

Insight Securities

• Following a volatile week marked by heavy sell-off due to escalating border tensions with India, KSE-100 Index appears wellpositioned for a rebound, supported by a series of positive developments. The most notable among these is the ceasefire agreement between Pakistan and India, facilitated by diplomatic intervention from the U.S. and regional partners. This has significantly eased investor concerns, as reflected in today’s market performance, where trading was briefly halted in early minutes. International mediation between the two archrivals is expected to support regional stability and investor confidence.

• Moreover, successful completion of the IMF’s first review under the Extended Fund Facility (EFF), unlocking a US$1bn tranche, along with approval of US$1.4bn under the Resilience and Sustainability Facility (RSF) for climate resilience. These developments are expected to lift market sentiment ahead of the much anticipated FY26 budget, where adherence with IMF guidelines will be critical. To highlight, external position and overall macros have improved substantially over the past year, which may support potential credit rating upgrades by global agencies. Additionally, Pakistan’s position as a net commodity importer makes it a key beneficiary of the current downtrend in global commodity prices.

Pakistan Auto: Auto volumes poised for modest uptick in Apr-2025 - By JS Research

May 12 2025

JS Global Capital

• We preview automobile sales volumes for Apr-2025, expecting the three major players including Indus Motors Company Ltd (INDU), Honda Atlas Cars Ltd (HCAR), and Pak Suzuki Motor Company Ltd, representing 84% of the four-wheeler market, to post a 4% YoY volumetric growth, reaching 9,466 units.

• The modest growth is likely to be driven by notable improvement in volumes of HCAR and INDU, with a significant growth of 70% YoY and 58% YoY, respectively. On the contrary, we expect Pak Suzuki (market leader) to report a negative growth of 25% YoY. Cumulatively, we expect our sample to post a decent growth of 37% YoY during 10MFY25.

• Auto-financing continues to rise amid ongoing monetary easing, up 7.5% YoY during Mar-2025. We believe the prospects remain positive with momentum likely to continue in upcoming months

Economy: Temporary shocks, sound fundamentals - By Inisght Research

May 12 2025

Insight Securities

• Domestic fertilizer industry is experiencing a decline in offtake since last few months, with urea sales falling by ~54% YoY in 1QCY25. The drop is largely attributed to weak agronomics caused by government’s decision to abolish support prices for wheat, which has severely dented farmer’s pocket. As a result, industry’s inventory levels have surged, reaching a four-year high. A similar trend was observed during 2016–2017, when urea sales dropped and inventory level reached record highs. At that time, poor farm economics were driven by several factors, including lower crop yields, weak commodity prices, uncertainty around urea pricing, crop damage from flooding, and increased fertilizer production amid improved gas availability. The government intervened to stabilize the situation by reducing urea prices and allowing urea exports to help bring down inventory levels.

• Fertilizer stocks have witnessed a significant decline, driven by falling offtake and emerging concerns over their dividend paying capacity. In this backdrop, we have estimated earnings for fertilizer companies under various offtake scenarios. However, the recent sell-off along with 100bps cut in policy rate and the potential for further easing in the second half of the year, given the significantly high real interest rate, has made fertilizer stocks attractive. Additionally, the strong balance sheets of fertilizer manufacturers position them to pursue new investment opportunities for future growth.

Economy: IMF approves USD 2.4Bn in funding for Pakistan - By Taurus Research

May 12 2025

Taurus Securities

• The IMF Executive Board has approved immediate disbursement of the next EFF tranche of ~USD 1Bn to Pakistan. In addition, the IMF has also approved USD 1.4Bn to Pakistan under the Resilience and Sustainability Facility (RSF) under climate financing.

• The IMF has acknowledged Pakistan’s policy efforts so far under the EFF as having delivered ’significant progress’ in stabilizing the economy and rebuilding confidence. On the fiscal side, Pakistan remains on track to achieve the Primary Surplus target for FY25 of 2.1% of GDP. While, gross FX reserves are also expected to reach USD 13.9Bn by Jun’25 close.

• Timely power tariff adjustments have helped reduce the stock of circular debt and its flow, with a need to accelerate cost-side reforms. Moreover, delivering on the FY25 budget and reforms like Agriculture Income Tax has helped build more policy credibility. With continued mobilization of revenue from the undertaxed and the non-compliant sectors to make the tax system more equitable and efficient. This combined with Federal & Provincial spending discipline is likely to build more resilience.

Morning News: Fragile ceasefire holds, permanent one is in sight - By HMFS Research

May 12 2025

HMFS Research

• A ceasefire between India and Pakistan was holding on Sunday after both sides blamed the other for initial violations, as US President Donald Trump vowed to help the arch-rivals find a solution on the disputed Kashmir region. The truce that took effect on Saturday followed four days of intense fighting between the nuclear-armed neighbours. In the worst fighting in nearly three decades, they fired missiles and drones at each other’s military installations, killing almost 70 people.

• The International Monetary Fund (IMF) Executive Board on Friday approved a total of $2.3 billion in funding for Pakistan, comprising the disbursement of a $1 billion tranche under its ongoing Extended Fund Facility (EFF) and the launch of a new $1.4bn Resilience and Sustainability Facility (RSF). The latest approval brings total disbursements under the $3bn EFF program to $2.1bn. The $1bn tranche will be disbursed immediately, while the RSF financing will be rolled out over the next 28 months to support long-term sustainability and climate resilience efforts.

• Emerging-market (EM) issuers are variously exposed to direct and indirect impacts from the global trade war, Fitch Ratings says in a new report. Credit pressures may become most evident in EMs where tariff effects combine with aggravating factors or add to preexisting pressures, even if direct US tariff exposures are small. APAC’s high trade openness and exposure to US demand leave it particularly exposed to direct tariff risks, but all regions will be affected, with Fitch expecting global growth to fall below 2% this year.

Technical Outlook: KSE-100; Expected to consolidate - By JS Research

May 12 2025

JS Global Capital

• The KSE-100 Index, after hitting a low of 102,421, recovered to close at 107,175, gaining 3,648 points DoD. Volumes stood at 516mn shares compared to 654mn shares traded previously. The index is expected to retest Friday's high of 107,541. A breakout above this level could target 108,329, followed by 110,408. However, any downside may find support between 103,880 and 105,720, with a drop below this range will target the recent low of 101,599. We recommend investors to ‘Buy’ for trading gains, with risk managed below the 102,421 mark. The immediate support and resistance levels are observed at 103,883 and 109,003, respectively.

Pakistan Pharmaceutical: Listed Pharma Sector Analysis 3QFY25; Deregulation improved sales and margins - By Topline Research

May 9 2025

Topline Securities

• Pakistan listed pharmaceuticals sector’s earnings were up by 83% YoY to Rs8.0bn in 3QFY25. This jump in profitability is primarily attributed to higher net sales, improved gross margins, and a decline in finance cost.

• Net sales increased by 12% YoY to Rs85.5bn in 3QFY25, primarily driven by an increase in drug prices following the deregulation of non-essential drugs in Feb-2024. Haleon, ABOT, FEROZ, HPL, and AGP led the sector, showing strong sales growth in absolute terms.

• This price increase led to an improvement in gross margins, rising to 39% in 3QFY25 from 31% in 3QFY24. Additionally, the recent decline in raw material prices for many drugs and the stable currency further contributed to the increase in gross margins. AGP recorded highest gross margins of 58% in 3QFY25.

Economy: Historically, the Stock Market Recovers After Conflicts End - By AHCML Research

May 9 2025

Al Habib Capital Markets

• When wars or tensions between India and Pakistan flare up, the stock market, especially Pakistan’s tends to drop sharply due to panic selling and foreign investor withdrawals. However, history shows that once the conflict ends and the risk of full-scale war fades, the market usually bounces back.

• For example, after the 2001-2002 military standoff, PSX had crashed by 25%, but it recovered once troops withdrew. Similarly, in 2019, after the Balakot airstrikes, the market initially fell 5% but stabilized within weeks as tensions eased.

• This pattern suggests that while geopolitical crises cause short-term volatility, markets often regain lost ground once stability returns. The recovery speed depends on the economy’s strength, the ongoing final meeting with IMF for USD1.3bn tranche after matching required condition from IMF we expect the market recover speedily. Longterm damage usually happens only if the conflict leads to sanctions or deep economic crises. In most cases, when the guns fall silent, investors return, and stocks climb back up.