Karachi: The NBP Financial Sector Fund (NFSF) demonstrated resilience in the face of a challenging stock market environment during the first quarter of fiscal year 2027, as reported in the quarterly report by the Board of Directors of NBP Fund Management Limited on November 3, 2026. The report highlights the fund's performance from July to September 2026, a period marked by significant macroeconomic developments both domestically and globally.
During the quarter, the KSE-100 Index experienced a decline of 5.7%, closing at 169,969 points. This downturn was influenced by rising tensions between the United States and Iran, coupled with escalating global oil prices, which heightened concerns about inflation and the economic outlook. According to the report, the index alone dropped 4.0% in September.
Despite these pressures, several macroeconomic indicators showed improvement. The State Bank of Pakistan's (SBP) foreign exchange reserves reached a record high of USD 21.4 billion in September, supported by a substantial USD 3 billion Eurobond issuance. Additionally, the current account deficit narrowed by 16% year-on-year to USD 874 million, driven by a 14% increase in workers' remittances, totaling USD 10.9 billion. The SBP forecasts remittances to surpass USD 44 billion in FY27.
The report also notes an upgrade in Pakistan's sovereign rating by Moody's to B3 in August, following an earlier upgrade by S&P to B in July. The SBP expects real GDP growth to range from 3.5% to 4.5% in FY27, buoyed by favorable agricultural prospects and improving high-frequency indicators.
Inflation remains a key concern, with the Consumer Price Index (CPI) averaging 10.2% in the first quarter compared to 4.3% the previous year. However, it showed signs of easing to 10.3% in September from 11.1% in August. The policy rate was maintained at 11.5%, with expectations of inflation reaching the 8% to 9% target range by June 2027.
An important development occurred on October 7, when a Staff-Level Agreement with the IMF was announced, potentially unlocking approximately USD 1.2 billion, further reinforcing external buffers and investor confidence.
Sector-wise, Commercial Banks, Fertilizer, and Food & Personal Care Products sectors outperformed the market, while sectors such as Auto Parts & Accessories and Cement lagged behind. Individuals and companies emerged as the largest net buyers, with inflows of USD 93 million and USD 25 million, respectively, while mutual funds and banks reduced their holdings.
According to information available from the Pakistan Stock Exchange (PSX), the size of the NBP Financial Sector Fund increased from Rs. 2,601 million to Rs. 2,784 million, reflecting a growth of 7.0%. The unit price of the fund decreased by 3.1% from Rs. 24.8901 to Rs. 24.1215, outperforming its benchmark, which declined by 4.6%. The fund has outperformed its benchmark by 54.8% since its inception in February 2018.
The fund, however, reported a total loss of Rs. 79.24 million during the period, with net expenses amounting to Rs. 24.11 million, resulting in a net loss of Rs. 103.35 million. Despite these figures, the fund's ability to outperform its benchmark reflects its robust strategy amidst a volatile market backdrop.