PSX Benchmark index up 3.8%WoW
Pakistan Stock Exchange (PSX) moved upwards sharply during the week, with benchmark Index advancing 6,634 points, up 3.8%WoW, to close at a fresh all-time high of 179,035 points.
Market participation improved by 9.7%WoW, with average daily traded volume rising to 1.3 billion shares, as compared to 1.1 billion shares in the prior week.
Momentum was driven by a favorable new year effect alongside a softer than expected December 2025 inflation of 5.6%.
Sentiments were further buoyed by sharp rally in the E&P sector, following OGDC’s oil and gas discovery in Nashpa Block, where a second formation delivered 4,100 barrels oil and 10.5mmcfd gas, adding to the earlier discovery announced in December 2025.
OMC volumes also increased by 6%YoY during December 2025.
On the macroeconomic front, Trade deficit increased by 24%YoY to US$3.7 billion during December 2025, whereas, GDP grew by 3.7%YoY during 1QFY26.
Foreign exchange reserves held by State Bank of Pakistan (SBP) increased by US$13 million to US$15.9 billion as of December 26, 2025.
Other major news flow during the week included: 1) SBP buys US$6.9 billion from currency market in 12 months, 2) FBR collects PKR6.2 trillion in 1HFY26, but falls short by PKR338 billion of target, 3) Pakistan Eyes US$1 billion Liability Settlement via UAE investment in Fauji Group, 4) US seeks Pakistani partnership in locomotive sales, mineral exploration, and 5) Pakistan gets ready to launch first Panda bond in China.
Transport, Property, Vanaspati & Allied Industries, Oil & Gas Exploration Companies, and Pharmaceuticals were amongst the top performing sectors, while Jute, Woollen, Cement, Real estate Investment Trust, and Textile Composite, were amongst the laggards.
Major buying was recorded by Mutual Funds and Companies with a net buy of US$24.5 million and US$9.4 million, respectively. Foreigners and Banks were major sellers with net sell of US$18.8 million and US$10.7 million respectively.
Top performing scrips of the week were: JVDC, SSOM, UBL, FFL, and EFERT, while laggards included: DGKC, CHCC, KTML, KOHC, and MLCF.
AKD Securities foresees the positive momentum in the benchmark index to continue due to further monetary easing driven by improving external account position and continuous focus on reforms amid political stability.
The brokerage forecasts the benchmark Index to reach 263,800 by December 2026.
Investors’ sentiments are expected to improve on the likelihood of foreign portfolio and direct investment flows, driven by improved relations with the United States and Saudi Arabia.
Top picks of the brokerage house include: OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP and SYS.
OMC offtakes were reported at 1.35 million tons during December 2025, up 6%YoY but down 5%MoM due to base normalization post-harvest season and weaker diesel offtakes.
MS led the month’s performance up 11%YoY as well as up 3%MoM to 628,000 tons, backed by mobility demand through strong 2-wheeler/ passenger car sales up 33% and 43%YoY.
Conversely, HSD volumes contracted to 553,000 tons, down 4%YoY as well as down 19% MoM as seasonal agri consumption tapered off, despite continued enforcement on smuggling curbs.
The bright spot was HOBC, sustaining previous month’s momentum, up 52%YoY as well as up 7%MoM to 38,000 tons, driven by ongoing SUV penetration.
With regards to non-retail fuels, RFO volumes more than doubled MoM, up 132% to 58,000 tons, while JP sales also surged to 67,000 tons, up 7%YoY and up 12%MoM.
On cumulative basis, 1HFY26 industry volumes grew to 8.16 million tons, up 2%YoY.
Retail segment (MS/HSD/HOBC) continues to drive demand, up 90% for the mix), which grew by 4%YoY during the first half.
PSO volumes were down 17%MoM due to HSD normalization. PSO’s total offtakes was reported at 535,000 tons for Dec’25, down 7%YoY as well as sown 17%MoM, primarily due to steep correction in HSD volumes, down 16%YoY as well as 32%MoM). Notably, HSD volumes declined to 222,000 tons due to post-harvest season normalization and slower logistic activity due to smog in northern regions of the country.
MS sales remained broadly stable at 230,000 tons, down 4% MoM but flat YoY, maintaining position in the retail segment.
Market share for December 2025 was reported at 39.6%, while 1HFY26 share also corrected to 42.2% as compared to 46.0% in 1HFY25.
Brokerage house expects company to close FY26 volumes with an accretion of 5%YoY, as compared to 7.2 million tons posted during FY25, due to company’s extensive retail network that allows it to recapture lost share once seasonal distortion fades off.
PDL collection was reported at PKR741 billion during 1HFY26. OMC sales have grown by 2%YoY during 1HFY26, with authorities estimated to have collected PkR741 billion under the Petroleum Development Levy (PDL) head. The FY26 target has been set at PKR1.47 trillion, up 20%YoY, from PKR1.22 trillion collected in FY25. Assuming 5%YoY industry growth and current PDL setting of PKR78 and PKR77 per liter for MS and HSD respectively. The brokerage house expects authorities to comfortably meet the annual target.
AKD Securities foresees a growth of 5%YoY for sector sales during FY26, led by recovery in commercial/ industrial activity during the year, amid stable fuel prices, down by PKR10.3 and PKR8.6 per liter for MS and HSD as of January 2026).
The brokerage house has a ‘BUY’ call for PSO and APL with December 2026 TP of PKR900 and PKR760 per share, respectively. The reasons for the recommendation include anticipated revision in OMC margins during 2HFY26 alongside volumetric recovery, while resolution of circular debt and renegotiation of RLNG cargoes is to favorably impact the state-owned PSO.