PSX benchmark index closes at highest ever mark
Pakistan Stock Exchange (PSX) continued its bullish momentum during the week ended on December 19, 2025. The benchmark index achieved its highest ever closing on Thursday, at 171,960 points, witnessed some profit taking on Friday, closing the week at 171,404 points, up 1,539 points or 0.91%WoW.
Market participation weakened by 5.6%WoW with average daily traded volume down to 1.2 billion shares, from 1.3 billion shares in the prior week.
Investors’ optimism was boosted following the announcement of a surprise 50bps rate cut by the State Bank of Pakistan (SBP), as against market’s anticipation of status quo. Sentiments were further boosted after current account recorded a surplus of US$100 million for November 2025.
On the macroeconomic front, Textile exports for 5MFY26 increased by 3%YoY to US$7.8 billion, whereas, Petroleum imports declined by 2%YoY to US$6.4 billion.
Foreign exchange reserves held by SBP increased by US$1.3 billion to US$15.9 billion as of December 12, 2025 after receiving IMF’s disbursement under the EFF and RSF.
Other major news flow during the week included: 1) Finance Minister rules out mini budget; insists revenue gap to be met via tax compliance, 2) Pakistan and Uzbekistan agree to extend PTA, 3) Pakistan seeks oil deal with Russia, 4) SIFC prioritizes brownfield refinery upgrades, and 5) Pakistan, China advance talks on US$2.2 billion industrial complex at Port Qasim.
Jute, Real Estate Investment Trust, Commercial Banks, Close – End Mutual Fund and Engineering were amongst the top performing sectors, while Woollen, Modarabas, Synthetic & Rayon, Textile Spinning and Vanaspati & Allied Industries were amongst the laggards.
Major buying was recorded by Individuals with a net buy of US$16.7 million, while foreigners and Insurance were major sellers with net sell of US$12.7 million and US$8.2 million, respectively.
Top performing scrips of the week were: RMPL, PIBTL, NBP, UBL, and DCR, while laggards included: SSGC, BNWM, PIOC, IBFL, and PGLC.
AKD Securities foresees the momentum in the benchmark index to continue given successful third tranche disbursement under the EFF & RSF, monetary easing environment, 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 United States and Saudi Arabia.
This outlook is supported by the lack of alternative investment avenues and the attractive valuation of local equities, at a multiple of 8.1x while offering a dividend yield of 6.5%.
The top picks of the brokerage house include: MEBL, MCB, HBL, OGDC, PPL, PSO, ENGROH, LUCK, DGKC, FCCL, ILP and INDU.
Maple Leaf Cement Factory (MLCF) announced the acquisition of 69.75% stake in Pioneer Cement (PIOC), comprising 58.03% through an agreement and 11.72% via a public offer. Notably, company already holds 7.63% stake (17,321,046 shares) at a cost of PKR1.24 billion. This acquisition will position MLCF as the third-largest player, with a combined market share of 15.5%. Earlier announced, public offer will be made on February 08, 2026 at PKR478.43/ share, (EV/ton of US$76.5). Total amount of consideration to be paid for the shares to be tendered through the Public Offer (assuming full acceptances) is PKR12.7 billion. In terms of the Share Purchase Agreement dated December 17, 2025 executed, 131,820,554 shares constituting 58.03% of the ordinary shares of the Target Company are proposed to be acquired by the Acquirer from the selling shareholders, at a price equivalent to PKR478.43. The proposed acquisition at PKR478.43/ share is at a premium to DCF-based valuation for PIOC. Nevertheless, it is expected any potential impact on MLCF’s target price to be partially offset by the price appreciation on the 7.63% stake already held. AKD Securities has a liking for MLCF due to: 1) company’s strong domestic market share, 2) efficient energy and fuel mix, 3) strategic efficiencies to be achieved post-acquisition and 4) higher retention prices due to inclusion of white cement & putty.
November 2025 textile exports were down 3%YoY arriving at US$1.4 billon as compared to US$1.5 billion in the same period last year. The decrease was mainly attributed to the decline in cotton yarn, cotton cloth, yarn, knitwear, bed wear, towels, tents & canvas and made-up articles. Whereas, on a monthly basis textile exports declined significantly by 12%MoM from US$1.6 billion, which was primarily due to the decline in the exports of raw cotton, cotton cloth, yarn, tents & canvas, made-up articles and value-added products.
Basic textile exports totaled US$185 million, down 16%YoY, mainly due to decline in the exports of cotton yarn, cotton cloth & yarn. Wherein, value added exports remained stable YoY, while, other textiles increased 1%YoY.
As of November 2025, cotton arrivals declined 1%YoY to 5.3 million bales from 5.4 million bales recorded in the same period last year. The decline was mainly driven by lower arrivals from Punjab (down 5%YoY) due to the reduced per acre yield, floods damage and pest attacks, partly offset by better arrivals from Sindh (up 3%YoY). Meanwhile, raw cotton imports dropped sharply by 32%YoY to US$77 million, reflecting the imposition of sales tax on imported cotton and yarn as well as weaker overall textile demand.
Cotton prices remained stable at PKR 15,100/maund during the month and are expected to remain stable in the next quarter amid moderate demand and unsold stocks.
For FY26, the cotton production target has been lowered to 4.8 million bales mainly due to lower yields in Punjab caused by adverse weather conditions and flood damage. Consumption has declined to 10.6 million bales driven by slower sector activity and softer global demand for textile products. However, export orders are expected to improve, going forward, supported by upcoming holiday & festive season. Consequently, demand for value added textile is also rising, providing support to the sector. In addition, continued trade agreements and relatively lower US tariffs on Pakistan compared to regional competitors are likely to play a key role in strengthening the performance of the sector.