PSX benchmark index remains range bound
Pakistan Stock Exchange (PSX) remained range bound during the week, with the benchmark index trading within a band amid the absence of major triggers and rollover week. Nonetheless, the benchmark gained 610 points or 0.44%WoW to close at 139,207 on Friday July 25, 2025. However, market participation declined by 16.7%WoW to average 635 million shares traded per day.
On the macro front, developments remained broadly positive as S&P upgraded Pakistan’s credit rating by one notch to B– after three years. Subsequently, Pak Eurobond yields declined across different maturities. Moreover, aforementioned improvement in credit rating along with tightening of illicit forex market, supported a 0.5%WoW appreciation in PKR to 283.45/US$, highest weekly gain in 93 weeks.
In last T-Bills auction, yields declined by to 10.85% for one-month paper, indicating expectations of rate cut in the upcoming Monetary Policy Committee (MPC) meeting scheduled for July 30, 2025. AKD Securities expects SBP to resume monetary easing with a 50bps reduction, supported by moderating inflation and easing geopolitical tensions, with July 2025 CPI projected at 2.5%YoY, down from 3.2%YoY in previous month.
The GoP has formed a task force to resolve the PKR2.8 trillion gas circular debt, with a proposed plan involving commercial borrowing and the imposition of a special levy to fund repayments.
Foreign exchange reserves help by State Bank of Pakistan (SBP) declined to US$14.5 billion as of July 18, 2025.
Other major news flow during the week included: 1) ADB revised Pakistan’s FY25 growth to 2.7 percent, 2) IMF tied 4% additional sales tax removal to wider tax net, 3) Foreign investors repatriated US$2.2 billion in FY25, 4) Power generation remained flat in FY25, and 5) ECC approved PKR100 billion financing for 50,000 housing units.
Food, Transport, and Auto assembler were the top performing sectors, while Vanaspati & allied industries, while Woollen, and Leather were among the laggards.
Major net selling was recorded by other organizations and Foreigners with a net sell of US$16.1 million. Mutual funds and Individuals absorbed most of the selling with a net buy of US$12.8 million.
Top performing scrips of the week were: UPFL, HGFA, FHAM, ATLH, and HUMNL, while the laggards included: PSEL, PKGP, BNWM, ABL, and SRVI.
According to AKD Securities, market is expected to remain positive in the coming weeks, with the upcoming MPC and corporate results remaining in the limelight.
The benchmark index is anticipated to sustain its upward trajectory, with a target of over 165,000 points by end December 2025, primarily driven by strong earnings in Fertilizers, sustained ROEs in Banks, and improving cash flows of E&Ps and OMCs, benefiting from declining interest rates and economic stability.
The top picks of the brokerage house include: OGDC, PPL, PSO, FFC, ENGROH, MCB, HBL, FCCL, KOHC, INDU, and SYS.
As per NFDC, Urea offtakes in June 2025 surged 39% MoM and 21%YoY and to 582,000 tons, taking the cumulative offtakes in 1HCY25 to 2.4 million tons, down 23%YoY.
The improvement in June, in our view, is largely driven by a combination of pent-up demand and pre-budget buying amid expectations of a potential hike in Federal Excise Duty (which ultimately did not materialize).
While this front-loaded demand provided a temporary boost, IMS Research expects normalization in the coming months as agronomic fundamentals remain strained, particularly with preliminary data indicating a decline in the area under cultivation for major Kharif crops, Cotton down 2.6%YoY and Rice down 5.4%YoY.
This may weigh on overall fertilizer consumption as we move through 3QCY25. The brokerage house expect a 7.5%YoY decline in Urea offtakes to 6.1 million tons in CY25.
Fauji Fertilizer (FFC) Urea sales increased 4%YoY to 269K,000 tons, taking 1HCY25 offtakes to 1.1 million tons, down 29%YoY. FFC Urea market share normalized to 46%. Meanwhile, DAP offtakes in June dropped 11%YoY to 77,000 tons, taking 1HCY25 offtakes to 288,000 tons, down 25%. FFC DAP market share came in at 67%.
Engro Fertilizers (EFERT) recorded Urea sales at 208,000 tons, up 34%YoY and 46% MoM. The YoY growth in Urea sales was due to low-base effect amid last year’s turnaround of its EnVen plant. EFERT Urea market share improved to 36%. The Company’s DAP sales came in at 12,000, down 62%YoY, taking the cumulative offtakes of 1HCY25 to 81,000, down 35%YoY.
Urea stocks slightly improved and were recorded at 1.28 million tons in June 2025, down 3% from 1.3 million tons a month ago. EFERT and FFC contribute 42% and 26%, respectively.
IMS Research believes the exceptional growth seen in June 2025 was a one-off event, and full-year CY25 offtakes are likely to remain under pressure (down 7.5% to 6.1 million tons), due to lower cultivation area for major Kharif crops.
Urea exports, if allowed by the government, will be a catalyst for the sector with EFERT being a major beneficiary.