PSX benchmark index posts 6.08%WoW decline
Pakistan Stock Exchange (PSX) trended negative throughout the week, some recovery was observed during the final trading session. The benchmark index declined by 6,939 points or 6.08%WoW to close at 107,175 level on Friday, May 09 2025.
Notably, Thursday saw the largest single-day decline in the index’s history, when the index plunged by 6,482 points or 5.89% amid heightened concerns over regional instability between the two neighboring countries.
On Friday the index recovered 3,648 points or 3.52% on the expectation of the approval of a US$1.0 billion tranche under the first review of the EFF program by the IMF’s Executive Board.
On the macro front, the central bank reduced policy rate by 100 bps to 11%. Workers’ remittances continued their strong trend, rising to US$3.2 billion for April 2025, up 13%YoY).
The budget deficit for 9MFY25 was recorded at PKR3.0 trillion, with the primary balance posting a surplus of PKR3.5 trillion for the same period.
IMF’s Executive Board has approved the US$1.0 billion tranche under the first review of the EFF program, alongside approving the new RSF program of US$1.3 billion.
Average daily traded volume was recorded at 508 million shares as compared to 424 million shares a week ago, up 20%WoW).
Foreign exchange reserves held by State Bank of Pakistan (SBP) reserves rose by US$118 million to US$10.3 billion as of May 02, 2025.
Other major news flow during the week included: 1) India cut water supply to Pakistan from Baglihar Dam on Chenab River, 2) Cement sales for April 2025 were recorded at 3.34 million tons, up 8%YoY, 3) S&P Global forecasted more rate cuts in Pakistan, 4) OMC sales in April 2025 increased by 32%YoY, and 5) GoP raised PKR299 billion through PIB auction.
Vanaspati & Allied Industries, Sugar, and Synthetic & Rayon were amongst the top performing sectors, while Transport, Chemical, and Refinery were the laggards.
Major selling was recorded by Mutual Funds and Individuals with a net sell of US$34.9 million. Banks, Companies and other organizations absorbed most of the selling with a net buy of US$31.0 million.
Top performing scrips of the week were: NESTLE, JDWS, IBFL, and MUREB, while laggards included: AGL, SEARL, PTC, and PSX.
According to AKD Securities, market appears to have overreacted to the ongoing escalations, as the development of nuclear capability has significantly reduced the likelihood of full-scale war. The same has been witnessed during escalations since both nations attained nuclear deterrence. During past escalation periods post-nuclear capability, the market has posted an average return of positive 3%. Meanwhile, in 3 months following de-escalation, the market has historically delivered an average return of +5%.
The brokerage house expects the market to rebound with de-escalation of ongoing geopolitical tensions, alongside approval of a US$1.0bn tranche under IMF’s EFF program and US$1.3 billion under new arrangement of RSF.
The brokerage house maintains an ‘Overweight’ stance on Banks, E&Ps, Fertilizer, Cement, OMCs, Autos, Textile, and Technology sectors, as these stand to benefit from monetary easing, structural reforms and reciprocal tariffs.
According to AKD Securities, Pakistan’s OMC offtakes rose to 1.46 million tons, up 32%YoY and 20%MoM during April 2025. The sharp incline was primarily led by a low-base effect due to depressed volumes over past 12 months, alongside mix of pent-up demand post Ramadan (March 2025). Moreover, possible reduction in cross-border smuggling, as indicated by 33%YoY and 28%MoM surge in HSD sales also contributed to an uptick.
Notably, MS sales were up by 25%YoY and 14%MoM as well, likely led by improving transport demand heading into the summer season.
Additionally, industry-wide HOBC sales remained on upward trajectory, increasing by 172%YoY during April 2025.
Overall, industry offtakes during 10MFY25 was reported at 13.2 million tons, up 6%YoY, with retail volumes (MS, HSD and HOBC) totaling 12.0 million tons, up 9%YoY.
Volumetric sales of Pakistan State Oil Company (PSO) during April 2025 were reported at 624,000 tons, up 12%YoY and 22%MoM, with company regaining some of lost market footing during FYTD, to stand at 43% during the month under review.
Notably, company’s MS and HSD offtakes stood higher by 12% and 22%YoY during the month, with retail market-share rising to 43%. With strong start to 4QFY25, the brokerage house expects PSO to close 4QFY25 with total sales of 1.9 million tons (up 1%YoY and 21%QoQ), as the final quarter typically witnesses a notable pickup in MS and HSD volumes.
Authorities collected PKR980 billion under Petroleum Development Levy (PDL) in 10MFY25. OMC sales have stood up by 6%YoY during 10MFY25, where-in the brokerage house estimate authorities to have amassed PKR980 billion under PDL head during the first ten months, with FY25 target of PKR1.28 trillion.
Additionally, in-order to elevate the non-tax revenue collection, authorities raised PDL limit to PKR77 and 78 per liter for MS and HSD in April 2025, partly aiming to finance the electricity tariff differential subsidy (TDS) during 4QFY25 on consumer bills. With this revision, the brokerage house anticipates authorities to collect PKR1.2 trillion during FY25, up by 22%YoY.
The brokerage house maintains its growth projection of 5%YoY for sector sales during FY26 as compared to growth of 6% during 10MFY25, led by lower fuel prices and recovery in commercial/ industrial activity during the year.
The brokerage house has a ‘BUY’ call for PSO and APL with December 2025 TP of PKR729 and PKR825 per share. Its reasons for liking include anticipated revision in OMC margins during 4QFY25 alongside volumetric recovery, while resolution of circular debt is to favorably impact the state-owned OMC, Pakistan State Oil Company.