PSX witnesses extreme volatility but benchmark index declines 2.6%WoW

Pakistan Stock Exchange (PSX) trended downward for most of the week before rebounding by 1,836 points, with the benchmark index shedding 4,992 points or 2.6%WoW to close at 184,174 points. The decline was triggered by State Bank of Pakistan (SBP) keeping policy rate unchanged at 10.5%, against market expectations. It was followed by heightened geopolitical tensions between US and Iran, and lower than expected results from FFC for the final quarter. However, sentiment was upturned as geopolitical tensions began to ease. Banking sector recorded second highest annual growth in deposits, ending the year at PKR37.4 trillion. Moreover, SBP reduced average Cash Reserve Requirement for banks from 6% to 5%, aimed at stipulating private sector credit growth.

Market participation strengthened marginally during the week by 3%WoW, with average daily trading volume to 1.40 billion shares, from 1.36 billion shares a week ago. Foreign exchange reserves held by (SBP) increased by US$13 million to US$16.1 billion as of Jan 23, 2026. PKR appreciated by 0.03%WoW against the greenback during the week to close the week at 279.77 PKR/ a US$.

Other major news flow during the week included: 1) GoP has set 5.1% GDP growth target for federal budget, 2) Brent crude nears six-month high on Iran attack concerns, 3) SBP revises GDP growth upward up to 4.75% for FY26, 4) IMF chief praises Pakistan’s reform push, and 5) Circular debt flow declines to PKR75 billion in 1HFY26.

Property, Jute, Vanaspati & Allied Industries, and Automobile Assembler were amongst the top performing sectors, while Fertilizer, Chemical, Insurance, Paper & Board, and Textile Spinning were amongst the laggards.

Major buying was recorded by Individuals and Foreigners with a net buy of US$25.7 million and US$17.8 million. Mutual Funds and Banks were the major sellers with net sell of US$22.7 million and US$11.8 million respectively.

Top performing scrips of the week were: JVDC, 2) SAZEW, KEL, MTL, and PPL, while top laggards included: GADT, HCAR, FFC, AICL, and LCI.

AKD securities foresees the positive momentum at PSX to continue on improving macros and continuous focus on reforms amid political stability.

The brokerage house anticipates the benchmark Index to reach 263,800 by end December 2026.

Investors’ sentiments are expected to improve on the likelihood of foreign portfolio and direct investment flows, driven by improved relations with the United States and Saudi Arabia.

Our top picks of the brokerage house include: OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP and SYS.