Karachi: The Board of Directors at NBP Fund Management Limited has released the unaudited condensed interim financial statements for the NBP Sarmaya Izafa Fund (NSIF) for the quarter ended September 30, 2026. The report, dated November 3, 2026, reveals a challenging quarter for the fund, characterized by a significant underperformance compared to its benchmark.
During the first quarter of fiscal year 2027, the KSE-100 Index experienced a decline of 5.7%, closing at 169,969 points. This downturn was driven by escalating tensions between the United States and Iran and a sharp rise in global oil prices, which fueled concerns about inflation and the economic outlook. In September alone, the index fell by 4.0%.
Despite these challenges, several macroeconomic indicators showed improvement. The State Bank of Pakistan's foreign exchange reserves reached a record USD 21.4 billion in September, surpassing the June target. This was bolstered by Pakistan's largest-ever Eurobond issuance of USD 3 billion. The current account deficit narrowed by 16% year-over-year to USD 874 million, supported by a 14% increase in workers' remittances, which rose to USD 10.9 billion. The State Bank of Pakistan projects remittances to exceed USD 44 billion for the fiscal year, while external debt servicing is expected to decrease by USD 5 billion.
Inflation remains a concern, with the Consumer Price Index averaging 10.2% in the first quarter of FY27, compared to 4.3% a year earlier. The State Bank of Pakistan maintained the policy rate at 11.5% in September, as inflation eased slightly to 10.3% from 11.1% in August. The central bank anticipates inflation to fall within the 8% to 9% target range by the end of June 2027.
Market participants saw Individuals and Companies as the largest net buyers, with inflows of USD 93 million and USD 25 million, respectively. In contrast, Mutual Funds, Banks/DFIs, and Brokers reduced their net holdings by USD 64 million, USD 36 million, and USD 10 million, respectively.
According to information available from the Pakistan Stock Exchange (PSX), the Commercial Banks, Fertilizer, and Oil & Gas Exploration sectors outperformed the market. Conversely, sectors such as Auto Parts & Accessories, Cement, and Technology & Communication lagged.
The NBP Sarmaya Izafa Fund reported a decrease in its size from Rs. 1,107 million to Rs. 1,041 million, a 6.0% decline during the period. The unit price fell from Rs. 41.3990 to Rs. 38.9514, marking a 5.9% decrease. The benchmark decrease during the same period was 3.2%, indicating that the fund underperformed its benchmark by 2.7%.
Since inception, the fund's NAV has increased by 1,249.7%, compared to a 971.1% increase for the benchmark, resulting in an outperformance of 278.6%. However, the fund incurred a total loss of Rs. 56.69 million during the period, and after deducting total expenses of Rs. 10.77 million, the net loss stood at Rs. 67.46 million.
Looking ahead, the near-term market direction will remain influenced by developments in the Middle East and global oil prices. Nevertheless, record foreign exchange reserves, resilient remittances, and continued IMF engagement support the macroeconomic outlook. The fund's performance remains closely tied to these broader economic conditions.