PSX benchmark Index closes the week up 3%WoW
Pakistan Stock Exchange (PSX) witnessed positive momentum during the week on hopes of deal between US and Iran. This, coupled with Iran-Oman talks aimed at restoring the Strait of Hormuz to its pre-conflict position, drove oil prices below US$80/bbl levels, before settling slightly up at US$82/ bbl on Friday. Moreover, robust financial results from the banking sector bolstered sentiments.
The benchmark Index closed the week up 5,336 points or 3%WoW at 181,430. Market participation remained thin with average daily traded volume falling by 29%WoW to 934 million shares.
Trade deficit for July 2026 reported at US$3.9 billion remained down 15%MoM led by higher exports. The positive sentiments were partially tempered by uncertainties surrounding the Red Sea passageway, and higher-than-anticipated CPI of 9.2%YoY for the month, although inflation came in single digits after 4 months.
Petroleum offtakes rose 23%YoY for July 2026 to 1.5 million tons as compared to the same period last year due to rains and floods, resulting in a lower base, along with tighter enforcement curbing fuel smuggling from Iran.
Cement sector offtakes grew 6%YoY to 4.5 million tons during the month, supported by improved construction activity.
Other major news flow during the week included: 1) Turkey, Saudi Arabia & Pakistan signed joint defence agreement, 2) OPEC plus raised September oil output by 188,000 bpd, 3) GoP raised PKR882 billion through T-bills auction, 4) GoP also raised PKR474 billion via PIBs sale, and 5) foreign exchange reserves held by State Bank of Pakistan (SBP) rose to US$17.0 billion as of Jul 31, 2026.
Top performing sectors included: Jute, Textile Spinning, and Property, while laggards included: Synthetic & Rayon, Leasing Companies, and Sugar & Allied Industries.
Buying by Mutual Funds amounted to US$13.2 million. Net sellers were Banks with US$11.2 million.
Top performing scrips were: GADT, POWER, CNERGY, NPL, and BOP, while laggards included: MEHT, IBFL, PGLC, KTML, and SHFA.
AKD Securities, expects market to improve on strengthening economic indicators amid easing geopolitical tensions, along with favorable financial results for the quarter ended June26.
Additionally, a potential US-Iran deal could moderate international oil prices towards pre-conflict levels, further supporting sentiment. Market continues to trade at attractive valuations.
According to the brokerage house, the benchmark Index is likely 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.
Sales of oil marketing companies (OMC) operating in Pakistan rebounded sharply in July 2026, up 23%YoY and 20%MoM, reported at 1.51 million tons. The recovery was broad based across all three major fuel categories, namely MS, HSD, and FO, with FO posting the strongest growth. The surge in FO demand was primarily driven by RLNG shortages in the power sector, stemming from supply chain disruptions in the Middle East.
High Speed Diesel (HSD) sales increased 23%YoY to 624,000 tons during the month under review. Last year’s figure was depressed by the monsoon floods, versus a tamer ongoing monsoon season this year. Sequential growth was also impressive, rising 20%MoM despite higher prices, pointing to potentially reduced smuggling.
Motor Spirit (MS) sales were recorded 729,000 tons, up 19%YoY, where the improvement is likely driven by a pickup in economic activity in combination with lower smuggling, which helped offset some of the impact of higher prices at the pump. PSO’s performance remained the most notable in this fuel segment, up 44%YoY, outperforming the industry as it gained back market share at the expense of GO.
Furnace Oil (FO) sales surged 406% YoY to 78,000 tons, driven by higher use in the power sector following supply chain disruptions in the Middle East causing shortages of RLNG.
Pakistan State Oil (PSO) started FY27 on a strong note, recording the largest market share gain among major OMCs, rising to 46.5% at the expense of GO, which saw a decline in market share to 5.7%, as geopolitical tensions in the Middle East disrupted fuel supplies from the OMC’s major fuel supplier, Aramco.
OMC sales posted a robust recovery in July despite continued high fuel prices, as recovering economic activity along with reduced smuggling from the Iran border helped support volumes. With the US and Iran expected to continue negotiations after the hostile military operation in July.
Analysts expect lower prices to help support volumetric growth, although any resumption of smuggling remains a risk. With the government making the OMC margin hike conditional on digitalization of the oil supply chain.
It is expected that enforcement measures will continue tightening going forward, which should close the operating environment for illegal fuel operators.
Cement offtakes increased by 6%YoY during July 2026, driven by rise in local offtakes amid recovery in construction activity. Local cement offtakes are expected to continue growth momentum in FY27, driven by availability of cheaper financing, improving income levels and favorable fiscal policy. Gross margins are also anticipated to remains stable, as higher cement prices may outweigh the impact of increasing input costs.
Cement offtakes increased by 6%YoY to 4.5 million tons during the month under review. The improvement was led by domestic demand, where local sales grew 17%YoY to 3.8 million tons on the back of continuous recovery in construction activity supported by: 1) subsidized house financing by government, 2) improving income levels, and 3) realization of pent-up demand. Regionally, North domestic dispatches rose 19%YoY to 3.1 million tons, while South domestic sales increased 9%YoY to 0.7 million tons.
As against this, exports declined 30%YoY to 0.7 million tons, as a result of 9%YoY decline in South exports to 0.7 million tons and absence of North exports amid the prolonged Afghan border closure.
Industry-wide capacity utilization increased to 62%YoY, as compared to 59% during the same period last year.
Regionally, North utilization improved to 54%YoY, led by strong demand. On the other hand, South utilization declined to 91% from 94%, amid decline in sea-bound exports.