At PSX volatility spikes daily trading 25.7%WoW
Pakistan Stock Exchange (PSX) remained volatile during the outgoing week driven by uncertainties surrounding the US-Iran conflict, pushing oil prices to US$80/ bbl before retreating. The benchmark index declined 4,626 points decline on Wednesday, but recovered partially on Friday. The index closed the week at 182,242 points, down 3,130 points or 1.7%WoW. Market activity remained strong, with average daily trading volume up 25.7%WoW to 1.3 billion shares.
On the macroeconomic front, worker remittances for June 2026 increased by 2%YoY to US$3.5 billion, taking FY26 total to a record high of US$41.6 billion, up 9%YoY.
Foreign exchange reserves held by State Bank of Pakistan (SBP) were reported at US$18.5 billion, as of July 03, 2026.
Yields during first FY27 T-Bills auction fell by 31-40 bps across all tenors.
Cement sales rose 18%YoY in June 2026 to 4.3 million tons, led by domestic dispatches, taking full year FY26 sales to 50.5 million tons, a 4-year high.
Other major news inflow during the week included: 1) Saudi makes biggest oil price cut in decades, 2) GoP buys more LNG as flows through Hormuz fail to recover, 3) IMF forecasts 3.5% growth rate for Pakistan’s economy in FY27, 4) RDA inflows increased to US$2.8 billion in FY26, and 5) Removal of MDR to provide leverage to banks.
Top performing sectors were: Synthetic & Rayon, Refinery, and Leasing Companies, while lagged included: Sugar & Allied Industries, Close-End Mutual Funds, and Transport.
Major buying was recorded by Individuals and Banks aggregated US$24.5 million. Major sellers were Companies and Mutual Funds with flows of US$20.9 million and US$11.3 million, respectively.
Top performing scrips were: IBFL, GHNI, CNERGY, PGLC, and LOTCHEM, while laggards included: MEHT, NPL, TPLRF1, KTML, and SNGP.
According to AKD Securities, going forward, positive progress on US-Iran conflict, along with moderating international oil prices towards pre-conflict levels would remain the key focus.
Additionally, favorable financial results for the period ended June 30, 2026 would support market sentiment in the near term. Market continues to trade at attractive valuations.
The brokerage house forecasts 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.
Exploration and production (E&P) sector earnings are expected to rise by 32%YoY during 4QFY26E due to higher oil and gas production and higher realized oil prices. Pakistani E&Ps are set to benefit from improving drilling activities due to improving sectoral liquidity.
According to an AKD report, the combined net profit for its E&P universe is expected to rise to PKR111.6 billion for 4QFY26, up 32%YoY and 22%QoQ, taking FY26 cumulative profit after tax to PKR357.5 billion, up 2%YoY as against PKR349.2 billion in FY25. The last quarter’s outperformance is a function of the Arab Light benchmark averaging US$103.9/ bbl during 4QFY26 alongside sharp surge in indigenous hydrocarbon production during the quarter under review.
On company wise basis, OGDC (40%YoY and 34%QoQ) and PPL (58%YoY and 39%QoQ), while POL is also anticipated to report growth in bottom line by 16%YoY and 10%QoQ. Conversely, MARI is anticipated to report a decline of 5 YoY and 15%QoQ attributed to normalized tax charges alongside comparatively gas-heavy production mix. On a full-year basis, sector’s earnings growth has remained resilient, up 2% YoY), even post weaker first-half results which were dragged by lower oil prices and production curtailments.
OGDC’s oil production reached 35,808 bpd in 4QFY26E, up 25%YoY and 9%QoQ, highest quarterly output since 3QFY23, directly validating the coming online of major fields throughout FY26, while PPL similarly posted recent highs of 12,737bpd, up 33%YoY and 13%QoQ. On the gas side, growth in production was broad-based, with PPL (607 MMCFD up 23%YoY, MARI (973 MMCFD – up12%YoY, POL (66 MMCFD – 54%YoY) and OGDC (878 MMCFD – up 10%YoY, with MARI posting all-time high quarterly gas production data as per PPIS data.
Overall, the continued easing of RLNG linked line-pack constraints alongside improvement in E&P activity leading to fresh discoveries has remained the primary reason which has underpinned the recovery in domestic hydrocarbon production.
Arab Light averaged US$103.9/ bbl (up 51% YoY and 29%QoQ) during 4QFY26, as the Iran-US standoff led to risk premium into global benchmarks between April and May 2026. However, Arab light prices stood at US$83.5/ bbl as of quarter close led by easing of geopolitical supply shock and softer regional demand amid rising fuel prices. Notably, universe net sales are projected at PKR289.6bn (up 45%YoY and 25% QoQ) during 4QFY26, taking FY26 sales to PKR951.7 billion (up 8%YoY), with improvement due to both higher oil price prices and volumes.
Dividend growth remains healthy across the universe on a full year basis, with FY26 DPS growing for OGDC (13%YoY), PPL (27%YoY), MARI (3%YoY) and POL (17%YoY). This is behest of improving E&P activity driven by rising sectoral liquidity leading to fresh discoveries and expansion into previously unexplored blocks (including offshore acreage).
Heading into FY27, the brokerage house anticipates continued growth in bottom-line and higher cash payouts, while sustaining capex in exploration. Furthermore, it remains bullish on the sector as evident by sharply improving cash collection ratios for OGDC and PPL, where it also sees influx of further cash flows as authorities finalize the multi-pronged gas sector circular debt settlement plan to clear past-due receivables.
The brokerage house reiterates ‘BUY’ stance on OGDC, PPL, MARI and POL.