PSX Closes Week in Red as Profit-Taking and Macroeconomic Pressures Weigh on KSE-100

On August 8, 2025, the Pakistan Stock Exchange (PSX) ended a bullish streak with the KSE-100 index dropping 264.34 points, or 0.18%, to close at 145,382.79, down from 145,647.13. The decline, driven by profit-taking after consistent gains, was compounded by macroeconomic challenges, including a third consecutive week of falling foreign exchange reserves and a surging trade deficit. As investors navigate these pressures, the market faces potential volatility, with focus shifting to the State Bank of Pakistan’s (SBP) policy moves and external financing prospects.

Profit-Taking Halts KSE-100 Rally

After reaching an intraday high of 146,813.43 points, the KSE-100 faced selling pressure, dipping to an intraday low of 144,917.18 before settling at 145,382.79. Samiullah Tariq, Head of Research at Pak-Kuwait Investment Company, attributed the pullback to “normal profit-taking behavior” following a sustained upward trend. Despite the daily loss, the index has gained 8.94% over the past month and an impressive 86.62% year-on-year, reflecting strong long-term performance but highlighting short-term corrections.

Foreign Exchange Reserves Decline

The SBP reported a $72 million drop in its foreign exchange reserves for the week ending August 1, 2025, bringing them to $14.232 billion, driven by external debt repayments. Total liquid reserves, including commercial banks’ holdings, fell by $111 million to $19.496 billion, with commercial banks’ reserves at $5.264 billion. This marks the third consecutive week of declines, raising concerns about Pakistan’s ability to manage its external obligations amidst ongoing IMF engagements.

Trade Deficit Surges, Adding Pressure

Pakistan’s trade deficit widened by 44% year-on-year in July 2025, reaching $2.8 billion. Imports surged to $5.4 billion, up 12% month-on-month and 29% year-on-year, outpacing export growth of $2.7 billion, which rose 9% month-on-month and 17% year-on-year. While export growth signals economic resilience, the faster rise in imports has strained the external account, fueling investor caution and contributing to market volatility.

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Outlook and Investor Sentiment

Analysts anticipate continued market fluctuations due to profit-taking, declining reserves, and the expanding trade deficit. The KSE-100’s resilience, bolstered by earlier macroeconomic gains like a $2.1 billion current account surplus in FY25 and a $7 billion IMF program, is now tested by these challenges. Investors are closely monitoring SBP’s policy signals, rupee stability, and potential external financing to gauge future market direction. The PSX’s recent history of sharp corrections, such as a 3,855.77-point drop on June 23 due to US-Iran tensions, underscores its sensitivity to both domestic and global factors.

As Pakistan navigates these economic headwinds, the PSX remains a critical barometer of investor confidence. With the KSE-100 still among the world’s top-performing indices, strategic policy moves and global developments will shape its trajectory in the weeks ahead.

Faizan

Hello, I’m Faizan, co-founder and tech & trends editor at TezzLive.com. My role is to keep an eye on what’s next — from emerging technology and digital culture to the stories shaping our future. I believe news should not only inform but also inspire curiosity and critical thinking.

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