PSX benchmark index declines 0.6%WoW
Pakistan Stock Exchange (PSX) remained volatile during the week ended on October 09, 2026 amid continued attacks on key shipping routes. The benchmark Index declined by 1,066 points or 0.6%WoW to close at 167,089. Market activity also weakened, with average daily trading volume declining by 16.5%WoW to 541 million shares.
Meanwhile, Ukraine’s drone strikes on Russian refineries and concerns over US energy supplies amid Hurricane Isaias kept Brent oil prices above US$100/ bbl, despite improving traffic through the Strait of Hormuz and Trump’s claim that it would refrain from attacking Iran until the midterm elections scheduled for early November 2026.
The IMF reached a Staff-Level Agreement with Pakistan on the 4th review of EFF and 3rd review of RSF, acknowledging the Government’s policies in navigating the Middle East conflict.
Foreign exchange reserves held by State Bank of Pakistan (SBP) increased to US$21.5 billion as of October 02, 2026.
Pakistan raised PKR352 billion in the latest PIB auction, with yields rising across all tenors.
Banking sector deposits rose 14%YoY to PKR39.2 trillion at end August 2026.
Cement offtakes increased 6%YoY to 4.6 million tons in September 2026, reflecting improved local demand due to recovery in construction activity.
Cotton arrivals increased 5%YoY to 3.2 million bales during the same period.
Other major news flow during the week included: 1) Makkah defence alliance agrees to ‘rapid force deployment’ in Saudi Arabia, 2) GoP debt posts marginal decline to date, 3) GoP clears nine bidders for Gepco sale, 4) Bahrain working to ‘speed up’ approval of Pak-GCC free trade pact, and 5) Pakistan, Qatar agree to review LNG deal.
While the laggards were: Vanaspati & Allied Industries, Leasing companies, and Sugar, Textile spinning, Synthetic & Rayon, and Modarabas emerged top performers.
Major selling was recorded by Mutual Funds with US$17.6 million. On the contrary, net buyers were Individuals (US$11.4 million) and Companies (US$6.5 million).
Top performing scrips were: TGL, PSO, BML, AGP, and FCCL, while laggards included: SSOM, PGLC, CPHL, IMAGE, and PSX.
AKD Securities anticipates the market to improve on the back of strengthening economic indicators. Additionally, easing inflationary pressures would reduce probability of monetary tightening. Any positive development on Middle East conflict could moderate international oil prices and serve as a key trigger for market, paving the way for monetary easing.
The market continues to trade at attractive valuations. The top picks of the brokerage house include: OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP and SYS.
Cement offtakes increased by 6%YoY to 4.6 million tons during September 2026, led by domestic demand, local sales grew 7%YoY to 3.8 million tons as construction activity rebounded following monsoon-related disruptions in August 2026.
Regionally, North domestic dispatches rose 5%YoY to 3.2 million tons, while South domestic sales surged 23%YoY to 0.6 million tons, supported by a low same period last year base (floods in Sindh in September 2025) and steady construction activity in the region. Combined South dispatches reached 1.5 million tons, the highest September on record, as South exports rose to a high of 0.8 million tons (up 36%YoY), offsetting the continued absence of North exports (0.2 million tons in the same period last year) amid the prolonged Afghan border closure.
On a sequential basis, offtakes rose 14%MoM (local: up 15%MoM; exports up 10%MoM) as easing rains allowed construction to resume, with North daily local dispatches rising to 105,000 tons/ day from 87,000 tons/ day in August 2026. On a cumulative basis, 1QFY27 offtakes grew 4%YoY to 13.1 million tons, with local dispatches up 8%YoY to 10.8 million tons (North: up 7%YoY to 9.0 million tons; South: up 13%YoY to 1.9 million tons). Exports declined 11%YoY to 2.3 million tons, as the Afghan border closure wiped out North exports (0.7 million tons in 1QFY26), more than offsetting a 0.4 million tons (up 19%YoY) rise in South exports.
Utilization improved on higher dispatches: Industry-wide utilization increased to 66%, as compared to 63% in the same period last year and 56% in Aug’26, on the back of higher dispatches. Regionally, North utilization stood at 57% (down 1.4ppts YoY), on absence of exports. On the other hand, South utilization surged to 99% from 77% in SPLY (up 21.7ppts YoY), amid higher exports and strong local demand.
Rising cement prices to outweigh cost pressures: AKD Securities expects sector’s margins to remain largely stable, as 10% of PKR147/ bag) rise in average cement prices since Middle East War is expected to largely offset the impact of increasing coal and fuel prices. Notably, international coal prices have risen 28% since the onset of the Middle East conflict to US$127/ ton currently. In the case of prolonged escalation and sustained higher coal prices, companies with higher reliance on coal for power generation would be more exposed.
Investment Perspective: The brokerage house projects local cement offtakes to grow by 8%YoY in FY27, driven by availability of cheaper financing under government schemes, improving income levels, favorable fiscal policy, and ease in construction cost following the potential de-escalation of Middle East tensions. In addition, sector’s price pass-on ability amid strong demand would support sector margins going forward. However, prolongation of the Middle East conflict, and spiked oil and coal prices remain key risks to demand and margin outlook.
The brokerage house maintains an ‘Overweight’ stance on the sector, supported by: 1) demand recovery, 2) stability in gross margins, and 3) reduction in debt levels.
Top picks of the brokerage house are: LUCK, FCCL, and DGKC.