KARACHI: Despite falling exports and a widening trade deficit in the first half of FY26, the Pakistan Stock Exchange (PSX) sustained its record-setting rally during the final two sessions of the outgoing week, propelling the benchmark index close to an unprecedented level near 179,500 mark as investors continued value-hunting at the start of the new year.
According to Topline Securities Ltd, the year began on a strong footing, with the KSE-100 Index gaining about 4pc week-on-week, driven largely by buying from local mutual funds, as reflected in National Clearing Company data. Improved sentiment was underpinned by a softer inflation reading and expectations of further monetary easing.
Key macro developments during the week included December 2025 consumer inflation easing to 5.61pc year-on-year from 6.15pc in November. Meanwhile, the trade deficit for December widened to $3.7bn, up 24pc year-on-year and 28pc month-on-month, highlighting persistent pressure on the external account despite broader macro stabilisation. The deficit swelled 34.57pc to $19.204bn in July-December 2025-26 against $14.271bn over the corresponding period last year. Market participation strengthened further, with average daily traded volume rising nearly 10pc week-on-week to around 1.3bn shares, while the average traded value clocked in at Rs49bn, reflecting sustained participation amid the rally.
Arif Habib Ltd reported that the KSE-100 index climbed from 172,401 points last week to 179,035 points, marking a gain of 6,634 points or 3.9pc week-on-week. The advance was supported by year-opening buying interest and improved confidence around macro indicators.
Index surged above 179,000 in outgoing week on value buying
On the growth front, GDP expansion in 1QFY26 was recorded at 3.71pc, improving sharply from 1.56pc in 1QFY25, though moderating from 6.17pc in 4QFY25. Growth was led by strong industrial expansion of 9.4pc, while agriculture and services posted growth of 2.9pc and 2.4pc, respectively.
In the energy sector, oil marketing companies (OMCs) reported December 2025 sales of 1.35m tonnes, up 6pc year-on-year, although volumes declined 5pc month-on-month. Cumulatively, OMC offtake during 1HFY26 reached 8.16m tonnes, reflecting a modest 2pc annual increase.
Refinery throughput edged up 0.9pc year-on-year in December, supported by higher petrol and furnace oil (FO) offtake, which offset weaker high-speed diesel (HSD) demand. HSD sales declined 8.6pc year-on-year to 396,000 tonnes, likely due to increased OMC imports amid falling prices and cross-border tensions. In contrast, FO sales rose 11.1pc to 227,000 tonnes, mainly on the back of higher refinery exports, though these were reportedly executed at a loss.
On the pricing front, petrol price fell by Rs10.28 per litre to Rs253.17, reflecting a Rs11.09 cut in the ex-refinery price, partially offset by a Rs0.81 increase in inland freight equalisation margin. HSD prices declined by Rs8.57 per litre to Rs257.08, following a Rs9.59 reduction in ex-refinery prices.
Foreign exchange reserves held by the State Bank of Pakistan increased marginally by $12.6m to $15.9bn during the week, while commercial bank reserves declined by $23m to $5.1bn. The rupee showed marginal strength, appreciating 0.02pc week-on-week to close at Rs280.11 against the US dollar.
AKD Securities Ltd noted that the market surged to a fresh all-time high, with momentum supported by the softer-than-expected inflation and a sharp rally in exploration and production stocks. Sentiment in the energy space was boosted by Oil and Gas Development Company’s oil and gas discovery in the Nashpa Block, where a second formation yielded 4.1kbpd of oil and 10.5mmcfd of gas, adding to an earlier discovery announced in December.
Looking ahead, analysts expect sentiment to remain largely positive. The KSE-100 Index is currently trading at a price-to-earnings ratio of about 8.7 times, broadly in line with its long-term average, while offering a dividend yield of around 5.6pc.
Published in Dawn, January 4th, 2026
