PSX poised for recovery as domestic, geopolitical risks subside, focus shifts to earnings: report

The Pakistan Stock Exchange (PSX) is expected to recover as domestic and geopolitical uncertainties subside, with investor focus likely to shift toward upcoming financial results and improving macroeconomic indicators, according to reports by two brokerage firms.

AKD Research expects the market to rebound as uncertainties ease, adding that attention will remain on the ongoing result season and macroeconomic stability.

Arif Habib Limited (AHL), in its weekly outlook, said the KSE-100 Index may witness temporary moderation in the coming week as Ramadan begins. However, the ongoing earnings season could provide further upside, particularly if companies post stronger-than-expected results.

AKD, however, maintained its projection for the KSE-100 Index to reach 263,800 by December 2026.

The market remained bearish during the week amid investor skepticism over political developments and recent domestic security incidents. These concerns, coupled with delays in the financial close of Reko Diq, weighed on the oil and gas sector, which recorded the largest index point decline. Overall, the benchmark index fell by 4,526 points, or 2.5% week-on-week (WoW), to close at 179,604 points.

The pressure was partially offset by supportive macroeconomic developments, including: (i) a budget surplus of Rs542 billion (0.4% of GDP) in 1HFY26 compared to a deficit of Rs1.5 trillion in the same period last year (SPLY); (ii) a 15% year-on-year (YoY) increase in worker remittances to $3.5 billion in January 2026; and (iii) auto sales reaching a 43-month high during the month.

During the week, Moody’s revised Pakistan’s banking system outlook from positive to stable, stating that although macroeconomic indicators have improved, recovery in the operating environment remains gradual.

Remittances by overseas Pakistanis rose 15% YoY to $3.5 billion in January 2026, compared to $3.0 billion in January 2025. On a month-on-month (MoM) basis, remittances declined 4%.

Auto sales increased to 23,100 units in January 2026, up 74% MoM and 35% YoY.

In the MSCI February 2026 review, ABOT was removed from the MSCI FM Standard Pakistan Index. SEPL and ZAL were added to the MSCI FM Small Cap Index, while LPL was deleted.

During the first week of February 2026, gas production declined 7.8% WoW to 2,798 mmcfd, while oil production fell 11.7% WoW to 59,121 barrels per day (bopd).

According to AHL, sector-wise negative contributions came from: (i) Banks (-1,901 points), (ii) E&Ps (-1,298 points), (iii) Technology (-484 points), (iv) Fertilizer (-372 points), and (v) Power (-306 points). Positive contributions were recorded by: (i) Investment Banks (+631 points), (ii) Pharma (+36 points), (iii) Transport (+5 points), (iv) Vanaspati & Allied (+2 points), and (v) Tobacco (+1 point).

Scrip-wise, major negative contributors were OGDC (-578 points), PPL (-572 points), UBL (-410 points), EFERT (-362 points), and BAHL (-359 points). Positive contributions came from ENGROH (+631 points), FFC (+81 points), AGP (+73 points), INDU (+31 points), and MCB (+25 points).

Average daily trading volume stood at 862 million shares, down 15% WoW, while average daily traded value declined 13% WoW to $152 million.

However, overall market participation strengthened, with average daily traded volume (ADTV) rising 8% WoW to 1.1 billion shares, compared to 983 million shares in the previous week.

State Bank of Pakistan (SBP) foreign exchange reserves increased by $21 million WoW to $16.2 billion as of February 6.

On the currency front, the Pakistani rupee appreciated 0.03% WoW against the US dollar, closing at Rs279.62 per dollar.