PSX benchmark index declines 6.3%wow
- Middle East conflict and rising oil prices expected to dictate market direction
At Pakistan Stock Exchange (PSX) sentiments remained subdued during the week, due to the escalation of war threats, alongside tensions on the Pak–Afghan border. Consequently, the index declined by 10,566 points or 6.3%WoW during the week, closing at 157,496 points on Friday, March 06, 2026.
Market participation slowed during the week, with average daily traded volumes decreasing by 24%WoW to 791 million shares, as compared to 1.0 billion shares in the prior week.
Monday witnessed the second-largest single-day drop in the index’s history, plunging by 16,089 points or 9.6%. The sharp fall appeared to be an overreaction, followed by a partial recovery in the subsequent sessions.
Meanwhile, the Middle East conflict resulted in the closure of the critical Strait of Hormuz, triggering a 16.3%WoW surge in the price of the Oil benchmark Arab Light to US$83.1/ bbl. This development raises concerns over energy security, inflationary pressures, and the external account, weighing on overall market sentiment despite Pakistan’s ability to manage the situation.
On the macro front, inflation rose to a 16-month high of 7% in February 2026 amid heightened volatility.
On the external front, trade deficit widened 5%YoY to US$3.0 billion in February 2026.
Cement offtakes recorded a 13%YoY increase in February 2026.
Other major news flow during the week included: 1) GoP raises PKR555 billion through T-Bills auction; yields move up, 2) Pakistan refinery secures crude via Fujairah, Red Sea amid Hormuz closure, 3) SBP governor confident about GDP growth and inflation, 4) OGDC strikes major oil, gas discovery in Kohat of daily 3,800 bpd oil and 11.2mmcfd gas, and 5) foreign exchange reserves held by State Bank of Pakistan (SBP) rose by US$87 million to US$16.3 billion as of February 27, 2026.
While Refinery sector remained the sole top performer, laggards included Vanspati & Allied.
Major selling was recorded by Mutual Funds and Foreigners with a net sell of US$56.0 million and US$22.1 million. Banks and Companies absorbed most of the selling with an aggregate net buy of US$49.5 million.
Top performing scrips of the week were: ATRL (up 4.8%WoW), 2) MARI (up 2.0%WoW), 3) KEL (up 2.0%WoW), 4) DHPL (up 1.7%WoW), and 5) HUMNL (up 1.1%WoW), while laggards included: JVDC, KTML, AKBL, SSOM, and PAEL.
According to AKD Securities, market sentiments are likely to be dictated by developments in the ongoing Middle East conflict. Meanwhile, GoP’s ongoing efforts to address energy conservation, the ongoing IMF review, and SBP’s commentary in upcoming MPC meeting on Monday would also remain key areas of investor focus.
In the medium term, any de-escalation of Middle East military conflict could trigger a significant market recovery, as the recent correction has made market valuations much more appealing.
The brokerage house anticipates the benchmark Index to reach 263,800 by end December, 2026.
Top picks of the brokerage house include: OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP and SYS.
Cement dispatches increased by 13%YoY to 4.2 million tons in February 2026, highest February offtakes in 4-years, led by growth in domestic demand and seabound exports. Domestic sales rose by 8%YoY, driven by the revival in construction activity amid easing financing rates and lower construction costs. Exports surged 38%YoY to 0.73 million tons, as 52%YoY growth in sea-bound exports supported by improving market diversification outweigh the impact of suspended North exports amid Afghan border closure.
Cumulatively, 8MFY26 dispatches reached 4-year high of 34.8 million tons, up 11%YoY, underpinned by 12%YoY growth in domestic demand. Utilization improved on stronger demand, Sequential decline in offtakes was mainly due to fewer working days in February, as avg. daily sales increased by 7%MoM to 123k tons from 116k tons in previous month. Consequently, industry-wide utilization improved to 65% during the month under review. Regionally, North and South utilization increased to 56% and 100% respectively.
Cement prices in the North increased by 3%MoM and 7%YoY to PKR1,420/ bag with improvement in demand. The said improvement in prices is expected to offset the increase in coal cost with higher reliance on Richard’s bay post Afghan border closure, thereby supporting gross margins. International coal futures have risen by 10% to US$109/ ton amid the Middle East military conflict. However, analysts believe increase in coal prices to remain limited due to rising local supplies in major coal importing countries, China and India. Cement manufacturers maintain average coal inventories exceeding one month, while also having cost pass-on ability due to improving demand. In addition, export risk also remains limited, given the contained coal cost outlook and less than 5% exposure to Middle East markets.
AKD Securities, projects local cement offtakes to grow by 8.7%YoY in FY26, driven by easing financing rates, lower construction cost, and higher public sector development spending.
The brokerage house maintains an ‘Overweight’ stance on cement sector, supported by: 1) demand recovery, 2) stability in gross margins, and 3) reduction in debt levels along with monetary easing.
Top picks of the brokerage house are: LUCK, FCCL, and DGKC. The liking for LUCK stems from: 1) improvement in core margins, 2) increase in dividend from power segment and 3) expected recovery in cyclical segments benefiting its subsidiaries.
FCCL is preferred: 1) higher retention prices, 2) optimized energy mix, and 3) easing finance cost.
DGKC liking is due to: 1) declining finance cost amid easing interest rates, 2) improving export prices amid increase in global demand, and 3) higher utilization to enhance fixed cost absorption.