PSX benchmark index records nominal increase despite volatility
Pakistan Stock Exchange (PX) ended the week on a positive note, albeit remaining volatile throughout the week, pressured by investor skepticism given uncertainty stemming from heightened geopolitical tensions between Pakistan and Afghanistan.
Pakistan secured a staff-level agreement with IMF in its second review for the US$7 billion Extended Fund Facility program and first review of Resilience and Sustainability Facility. The benchmark index gained 708 points during the week, witnessing it’s second highest single-day gain of 7,033 points on Tuesday, up 0.4%WoW, to close at 163,806 level.
Market participation strengthened by 36%WoW with average daily traded volume reported at 2.2 billion shares, as compared to 1.6 billion shares a week ago.
On the macroeconomic front, petroleum imports for September 2025 were reported at US$1.2 billion, down 11%YoY.
Textiles and clothing exports for September 2025 were recorded at US$1.6 billion, down 2%YoY.
Roshan Digital Accounts inflows for September 2025 were recorded at US$196 million, up 17%YoY
LSM output increased by 0.5%YoY during August 2025.
Foreign exchange reserves held by State Bank of Pakistan (SBP) increased by US$21 million to US$14.4 billion as of October 10, 2025.
Other major news flow during the week included: 1) Pakistan and Saudi Arabia agreed to explore new trade, investment avenues, 2) Shehbaz and COAS to visit Saudi Arabia from October 26, 3) Pakistan and Vietnam begin PTA talks to expand trade, investment, 4) Nepra gives the go-ahead to effect CTBCM, and 5) Petrol and diesel prices slashed.
Vanaspati & Allied Industries, Commercial Banks, INV.Banks/ INV.Cos/ Securities Cos, Power Generation & Distribution and Paper & Board were amongst the top performing sectors, while Close-end Mutual Funds, Leasing Companies, Modarabas, Textile Weaving and Leather & Tanneries were amongst the laggards.
Major selling was recorded by Mutual Funds and Insurance aggregating to US$36.5 million, which was mostly absorbed by Companies recording net buy of US$30.3 million.
Top performing scrips of the week were: PSEL, BOP, SSOM, PSX, and LOTCHEM, while laggards included: GADT, PKGP, PABC, and JVDC.
According to AKD Securities, believes the bullish momentum o continue given successful staff-level agreement of the IMF’s second 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, offering attractive dividend yield.
Top picks of the brokerage house include: MEBL, MCB, HBL, OGDC, PPL, PSO, FFC, ENGROH, LUCK, DGKC, FCCL, and INDU.
The State Bank of Pakistan’s Annual Report for FY25 paints a picture of economic stability — lower inflation, fiscal discipline, and an improving external balance. Yet behind this carefully crafted optimism lies a harsher reality: the recovery remains shallow, driven less by structural reform and more by temporary external support.
Growth in FY25 came largely from the services sector, while agriculture and manufacturing continued to falter. Imports swelled as activity picked up, but exports stagnated under global uncertainty and domestic inefficiency. The current account surplus was achieved not through stronger production or competitiveness, but through remittances — a lifeline that masks structural decay.
Fiscal consolidation is being celebrated, yet it came at the cost of public development and investment. The deficit may have fallen to a nine-year low, but the economy remains trapped in a low-growth cycle. Inflation dropped dramatically from 23.4 percent to 4.5 percent, helped more by global trends and a stable exchange rate than by local reforms. The sharp interest rate cuts — totaling 1,100 basis points — were a desperate attempt to revive growth, not a sign of durable strength.
The SBP rightly points to Pakistan’s chronic low savings rate — a symptom of deep-rooted structural neglect. Successive governments have relied on borrowing rather than reform, crowding out private investment and deepening the sovereign-bank nexus. Add to that the recurring political turmoil, erratic taxation, and regulatory red tape, and one finds little incentive for long-term investment.
While the IMF’s Extended Fund Facility has temporarily restored confidence, Pakistan’s recovery remains externally driven and internally hollow. Even as credit rating agencies upgrade the country’s outlook, floods, governance failures, and climate stress continue to erode resilience.
For FY26, modest GDP growth and renewed inflation pressures loom large. Unless policymakers move beyond cosmetic stabilization toward real structural reform — encouraging savings, reforming taxation, and ending fiscal indiscipline — Pakistan’s so-called “stability” will prove another passing illusion.
Fertilizer offtakes increased during September 2025, primarily driven by: 1) discount offerings, 2) lower inventory, and 3) incentives from the Punjab Government, including interest-free loans and cash assistance. Product-wise, urea sales inclined 17%YoY, supported by discounts, with the average consumer price down by PKR258/ bag YoY. Cumulative Kharif offtakes rose 13%YoY.
As against this, DAP sales dropped by 27% YoY, attributed to 17%YoY increase in DAP prices. Among other nutrients, CAN offtakes surged by 59%YoY, while phosphate nutrients, NP and NPK sales declined by 20% and 17%YoY, respectively.
Analysts expect urea sales to improve in coming months, particularly with the arrival of Rabi season supported by 1) better water availability, 2) reduced channel inventory, and 3) softer nitrogenous nutrient prices. Moreover, improvement in farm economics due to higher food prices post-flood are expected to further support nutrient offtakes.
In addition, announcement of any subsidy to ensure food stability would provide further support to offtakes.
Meanwhile, urea inventory reached 1.15 million tons at the onset of Rabi season compared to required buffer stock of 300,000 tons, and with the potential allocation of gas to RLNG-based plants, the case for exports has strengthened.
Notably, authorities had previously allowed urea exports in January 2017 when inventory levels exceeded 1.0 million tons, assessing an additional 1.1 million tons of stock for Kharif 2017.