PSX benchmark index up 1.8%WoW
Pakistan Stock Exchange (PSX) continued upward momentum during the week, driven by expectations of strong earnings. The benchmark Index was up 2,351 points or 1.8%WoW, closing the week at 134,300 points on Friday July 11, 2025.
Positive sentiments were reinforced by workers’ remittances rising to US$3.4 billion in June 2025, up 8%YoY, taking FY25 inflows to US$38.3 billion, up 27%YoY.
Foreign exchange reserves held by State Bank of Pakistan (SBP) were reported at US$14.5 billion as of July 04, 2025. Despite that PKR witnesses slight depreciation.
However, market participation declined, with average daily traded volumes falling by 2.0%WoW to 948 million shares, down from 967 million shares in the earlier week.
The GoP raised PKR1.4 trillion from T-Bills auction.
Auto sales for June 2025 were recorded at 25,305 units, up 43%YoY, driven by higher Passenger Cars and LCVs sales, mainly due to pre buying ahead of the proposed GST hike on vehicles up to 850cc from 12.5% to 18%.
The government utilized a total of PKR1,045 billion, out of the budgeted allocation of PKR1,100 billion, for development projects during FY25.
Other major news flow during the week included: 1) Pakistan retires PKR500 billion SBP debt early, 2) GoP raises PKR208 billion from PIBs auction, 3) Textile exports rose by 7.22%YoY in FY25, 4) Pakistan and Russia discuss steel mill revival, and 5) Nepra announced negative FCA of PKR4.03/kwh for KE consumers.
Woollen, Jute, Textile spinning, Textile composite, and Modaraba, were amongst the top performing sectors, while ETFs, Technology & Communication, Close-end Mutual Funds, Oil & Gas Exploration, and Refinery were amongst the laggards.
Major buying of US$19.2 million and US$14.1 million was recorded by Mutual Funds and Individuals, respectively. Companies and Banks were the sellers during the week, with a net sell of US$8.9 million and US$8.7 million, respectively.
Top performing scrips of the week were: 1) BNWM, MEHT, GADT, KTML, and KOHC, while laggards included: PSEL, AIRLINK, PKGP, BAHL, and EFERT.
According to AKD Securities, PSX is likely to maintain a positive trend in the coming weeks, driven by the expectations of strong corporate earnings.
The index is anticipated to remain on upward trajectory, primarily driven by strong earnings in Fertilizers, sustained ROEs in Banks, and improving cash flows of E&Ps and OMCs, benefiting from falling interest rates and economic stability.
Top picks of the brokerage house include: OGDC, PPL, PSO, FFC, ENGROH, MCB, HBL, KOHC, FCCL, INDU, and SYS.
Car sales in Pakistan as per PAMA data were reported at 21,773 units in June 2025, reflecting a 64%YoY and 47%MoM rise. MoM rise was mainly led by a 39-month high Alto sales due to pre-buying as GST was set to increase effective from July 01, 2025 to 18.0%, from 12.5%. YoY growth was supported by a more stable macroeconomic environment, introduction of more variants, lower interest rates, easing inflation, and improving consumer sentiment. This took FY25 sales to 148,023 units a 43%YoY rise from 103,829 units in FY24.
Pak Suzuki Motor Company (PSMC) posted the highest MoM growth mainly due to 9,497 units of Alto sold in June 2025, a 39-month high. Cultus sales also rose to 523 units. Sazgar Engineering (SAZEW) posted MoM growth of 47% and a 55%YoY rise to 1,349 units, second highest monthly sales. The launch of the new facelift of HAVAL also supported higher sales. In FY25, total sales surged to 10,844 units, up from 5,374 units in FY24. Indus Motor Company (INDU) posted a 25%YoY and 24%MoM decline to 3,687 units in June 2025. Honda Atlas Cars (HCAR) also witnessed a 65%YoY and 10%MoM decline to 1,808 units in June 2025.
According to media reports, the Special Investment Facilitation Council (SIFC) has instructed authorities to revise the Brownfield Refinery Policy 2023 by September 31 to address the deadlock on the sales tax exemption issue, which has stalled US$6 billion worth of refinery upgrade projects in Pakistan.
According to minutes of the SIFC Executive Committee meeting released on July 01, the Secretary of Petroleum is tasked with communicating final, non-extendable timelines for resolving the sales tax exemption dispute with the relevant stakeholders.
If the issue remains unresolved by the deadline, the SIFC will revise the policy within three months to introduce fiscal incentives to make the projects financially viable.
The International Monetary Fund (IMF) previously rejected the government’s proposals to restore the zero-rated status for petroleum products and to impose a 10% sales tax, citing concerns over the Federal Board of Revenue’s (FBR) capacity to enforce tax laws.
The ongoing deadlock threatens to derail investment plans worth US$6 billion in Pakistan’s refining sector. Refineries argue that the sales tax exemption introduced in the FY25 Finance Bill has left crude oil imports ineligible for sales tax adjustments, rendering upgrade projects economically unfeasible and significantly lowering internal rates of return (IRRs).
Industry stakeholders further warn that the current tax policy undermines a US$1.6 billion incentive package committed by the government over seven years to support the refinery upgrades.
Earlier, refinery CEOs had urged both the Petroleum and Finance Ministries to resolve the sales tax issue in the FY26 budget and requested tax policy stability for seven years to enable long-term investments.
While the tax issue remains unresolved, Petroleum Minister Ali Pervaiz Malik secured temporary relief through an Economic Coordination Committee (ECC) decision to increase the Inland Freight Equalization Margin (IFEM) by PKR1.87 per litre for 12 months. This measure was aimed at offsetting an estimated PKR34 billion in losses for refineries and oil marketing companies (OMCs) through June 2025.
However, stakeholders emphasize that only a permanent tax solution will unlock the investment required for upgrading the refineries.
In a separate development, the SIFC has approved an agreement between Sui Southern Gas Company (SSGC) and Jamshoro Joint Venture (JJVL) to restart the JJVL LPG-NGL extraction plant, which has been idle since June 2020.
The plant is expected to be operational by July 31, 2025, under a new rate determined by the Oil and Gas Regulatory Authority (OGRA).