PSX benchmark index up 4.1%wow
- Smooth IMF review, easing inflation, and improved ratings continue to sustain bullish market momentum
Pakistan Stock Exchange (PSX) sustained its bullish momentum during this past week, driven by investors’ confidence following the historic meeting between the Prime Minister and US President at the Oval Office. The benchmark index was up 6,733 points or 4.1%WoW to close at a historic high of 168,990 points on Friday October 03, 2025. However, market participation plunged by 19.8%WoW to an average daily traded volume to 1.8 billion shares, as compared to 2.2 billion shares traded a week ago.
On the macroeconomic front, inflation for September 2025 was recorded at 5.6%YoY, marking the highest level in the past 10 months, given the recent flooding. In anticipation, yields on tenors of T-Bills in the last auction increased, reflecting investor expectations that the policy rate will remain unchanged in the near term.
Trade deficit for September 2025 increased to US$3.3 billion, from a deficit of US$2.3 billion during the same period last year.
Cement sector, offtakes for September 2025 was recorded at 4.25 million tons, up 7% YoY, given 14%YoY surge in domestic sales.
Offtakes of OMCs during September 2025 was registered at 1.4 million tons, up by 8%YoY.
Other major news flow during the week included: 1) Prime Minister solicited US investment in meeting with President Trump, 2) Trade with Central Asia, Kabul surges to US$2.4 billion, 3) Petroleum Division to discuss GST waiver for petroleum products with IMF, 4) Pakistan-IMF talks on US$ 7billion EFF and RSF reviews begins, and 5) FBR notifies 40% regulatory duty on import of used cars.
Commercial Banks, Fertilizer, Refinery, Vanaspati & Allied Industries and Transport were amongst the top performers, while Modarabas, Jute, Textile Spinning, Close-end Mutual Funds and Textile Composite were amongst the laggards.
Major buying was recorded by Mutual Funds and Individuals with a net buy of US$82.2 million, while Insurance, Companies and Banks/DFIs remained the highest seller, with a net sell of US$71.4 million.
Top performing scrips of the week were: BOP, SAZEW, FABL, YOUW and FATIMA, while laggards included: HUMNL, NPL, RMPL, MTL, and PIOC.
AKD Securities foresees the momentum in the benchmark index to continue given smooth completion of IMF 2nd review, minimal flood impact and improved credit ratings by global agencies amid falling fixed income yields.
Investors’ sentiments are expected to further improve on the likelihood of foreign portfolio and direct investment flows, driven by improved relations with the US and Saudi Arabia.
The outlook is supported by the lack of alternative investment avenues and the attractive valuation of local equities.
Top picks of the brokerage house include: OGDC, PPL, PSO, FFC, ENGROH, MCB, LUCK, DGKC, FCCL, INDU, and SYS.
The PSX has turned into a theater of euphoria. In recent months, the KSE-100 has scaled historic highs, luring investors with the promise of easy gains and signaling a newfound confidence in the economy. The question now is not whether the rally has been spectacular, but whether it can last.
Several factors support the bulls. The State Bank’s shift toward monetary easing has reduced borrowing costs, drawing investors away from fixed income and into equities. Lower interest rates traditionally inflate valuations, and Pakistan is no exception. Add to this the IMF’s continued engagement and incremental fiscal discipline, and the picture looks markedly better than just two years ago when fears of default loomed large. International credit agencies have upgraded Pakistan’s outlook, further feeding optimism.
Sectors like banking, energy, and cement — heavyweights in the index — have reported improved earnings, lending substance to the rally. Market psychology is also playing its part; momentum has a way of sustaining itself, as more investors join in, driven by fear of missing out.
But euphoria has a habit of blinding participants to lurking dangers. Pakistan’s political fragility remains the most potent risk. A sudden shift in the governing coalition, renewed street agitation, or policy U-turns could shake investor confidence overnight. Likewise, the country’s external account remains precarious; a spike in oil prices or weakening of the rupee could unravel the fragile stability. Inflation, though easing, is hardly conquered, and any resurgence would force the central bank back into tightening mode.
Overvaluation is another trap. After such a steep run, some stocks now trade at stretched multiples. Unless earnings growth matches expectations, disappointment could trigger a sell-off. And with global financial markets on edge over interest rate uncertainty and geopolitical flare-ups, Pakistan is hardly insulated from external shocks.
Oil markets thrive on stability, yet today they stand at the crossroads of three unpredictable forces: OPEC’s internal calculations, China’s demand swings, and the broader geopolitical turmoil stretching from the Middle East to Eastern Europe. Together, these factors create a triple whammy of uncertainty that is shaking investor confidence and distorting price forecasts
First, OPEC remains the central player, but its cohesion is under strain. Saudi Arabia’s output discipline often clashes with the fiscal needs of smaller producers desperate for higher revenues. The cartel’s recent production adjustments reflect less a unified strategy and more a fragile balancing act between market control and survival. Traders now treat OPEC announcements with skepticism, wary that compliance may fracture under pressure.
Second, China — the world’s largest crude importer — casts a long shadow. Its slowing economy, punctuated by property sector woes and uneven industrial growth, has dampened energy consumption. Yet at the same time, Beijing stockpiles aggressively when prices dip, injecting volatility into the market. A single policy shift in China, from stimulus measures to green energy acceleration, can ripple through global demand curves in weeks, leaving analysts scrambling to adjust projections.
Finally, geopolitics adds combustible uncertainty. Wars in Ukraine and the Middle East, sanctions on Russia and Iran, and maritime tensions in the South China Sea all threaten supply chains and shipping lanes. Insurance premiums on crude shipments rise, pipelines face sabotage risks, and diplomatic fractures widen the unpredictability. Energy markets are not just reacting to supply and demand—they are hostage to political brinkmanship.