PSX to maintain positive momentum due to further monetary easing: report

The positive momentum in the benchmark KSE-100 Index of the Pakistan Stock Exchange (PSX) is expected to continue, fueled by further monetary easing, a strengthening external account position, and ongoing reforms supported by political stability, according to a weekly outlook note by AKD Research.

The brokerage firm projected that the KSE-100 Index is expected to hit 263,800 by December 2026. Investor sentiment is anticipated to improve due to the potential inflow of foreign portfolio and direct investments, bolstered by stronger ties with the US and Saudi Arabia. 

According to the brokerage note, the market moved upwards sharply during the week ended Friday, with the KSE-100 Index advancing 5,375 points, or 3% week-over-week, to close at 184,410 points. Market participation also strengthened by 25% WoW, with Average Daily Trading Volume up to 1.6 billion shares, compared to 1.3 billion shares in the prior week. 

Momentum was driven by positive sentiments due to favourable macroeconomic indicators alongside improved relations and news of potential military equipment deals with multiple countries, including Saudi Arabia, Bangladesh and Azerbaijan. Moreover, positive meetings with China to strengthen coordination at bilateral and multilateral forums and towards CPEC phase-II further helped improve the sentiment. 

On the macroeconomic front, remittances for December 2025 totaled $3.6 billion, up 17% YoY, bringing the total for 1HFY26 to $19.7 billion, up 11% YoY. Central government debt fell by Rs 345 billion in 5MFY26 to Rs 77.5 trillion. Additionally, T-bill yields declined by 29, 34, 32, and 33 bps for the one-month, three-month, six-month, and 12-month papers, respectively, in the first auction following declining inflation. Cement offtakes grew by 1.5% YoY in December 2025, due to higher local dispatches. 

Furthermore, SBP’s foreign exchange reserves increased by $141 million WoW, ending the week at $16.1 billion as of January 2nd. On the currency front, the Pakistani Rupee (PKR) appreciated by 0.03% WoW against the US dollar, closing the week at 280.02 PKR/USD.

Other major news during the week included: 1) Gas circular debt rises to Rs 3.2 trillion, 2) Government considers a Rs 5/liter levy on MS and Diesel to aid the gas sector, 3) OGRA moves to scrap fixed returns in gas pricing, and 4) Pakistan cuts national average power tariff for CY26.

Sector-wise, Transport, Pharmaceuticals, Insurance, Refinery, and Leather & Tanneries were among the top performers, up 7.2%, 6.5%, 6.3%, 6.0%, and 6.0% WoW, respectively. On the other hand, Textile Spinning, Vanaspati & Allied Industries, Jute, Miscellaneous, and Close-End Mutual Funds were among the worst performers, with declines of 6.6%, 4.7%, 1.4%, 0.7%, and 0.5% WoW, respectively.

In terms of market flows, major net buying was recorded by Mutual Funds and Companies, with net purchases of $71.5 million and $35.5 million, respectively. Conversely, Banks and Foreigners were the major sellers, with net sales of $56.3 million and $42.5 million, respectively.

Company-wise, top performers during the week included: 1) AICL (up 32.1% WoW), 2) MCB (up 12.9% WoW), 3) ABOT (up 11.5% WoW), 4) HALEON (up 11.4% WoW), and 5) SAZEW (up 10.5% WoW). The top laggards were: 1) PSEL (down 15.5% WoW), 2) SSOM (down 7.0% WoW), 3) GHGL (down 2.8% WoW), 4) DHPL (down 2.6% WoW), and 5) ISL (down 2.6% WoW).