In a stunning display of shareholder fervour, Pakistan Stock Exchange (PSX) closed week to September 26, 2025, at an all-time high of 162,257 points—registering a strong weekly gain of 4,220 points or 2.67% week-on-week. The relentless bid pressure is as much a witness to stratospheric corporate fundamentals as of an actual change in macroeconomic temperament, precipitated by earthquake-sized financial and political events.
Last week’s equity market recovery was triggered by two heavy events: Prime Minister Imran Khan’s diplomatic gesture to American President Donald Trump and the signing of a long-awaited PKR1.2 trillion debt restructuring deal with commercial banks to remove circular debt built up in the power sector. Both have conveyed a clear message to local and foreign investment communities that Pakistan is embarking on economic reform, institutional confidence, and international cooperation.
Power and Energy sector stocks, as anticipated, led the pack, with E&P companies and power generation companies spearheading the rally in the index. The commercial banks also participated in the middle of fueling the rally, following improved quality of assets and good return on equity history. Because settlement of circular debt will decrease the cost of business for power companies, these sectors are likely to re-rate once more.
Adding to the good mood is word that a Saudi trade delegation is to visit Pakistan within a few weeks’ time to discuss chances of bilateral investment and trade. The visit follows the two countries signing a strategic defense agreement, an indication of increased cooperation not only in the diplomatic sphere but also in the economic one. Floor sentiment in market trading has been driven by fresh hope of fresh new foreign direct investment (FDI) into the infrastructure and energy sectors. Weekend buys hit new records, with day average traded volumes rising 20%WoW to 2.2 billion shares. This is driven by higher retail and institutional buying supported by a strong rupee, lower levels of liquidity, and declining interest rates.
Macroeconomic indicators were also firming up. State Bank of Pakistan foreign exchange reserves in Pakistan increased US$22 million to US$14.4 billion as of 19 September 2025. Meanwhile, the Pakistani currency eased modestly—closed at PKR281.37 per U.S. dollar, +0.03% year-to-date—exhibiting currency stability and firming external accounts. Off-takes of fertilizer also witnessed unbelievable numbers, and off-takes of fertilizers increased in the month of August. Urea off-takes increased by 46%YoY and DAP off-takes increased by 53%YoY, respectively, because of seasonality off-takes, price-off-takes at discounts, and inventory off-takes. It is a positive sign for rural incomes as well as consumption-led growth before the Rabi season.
The overall economic tale, nonetheless, was not trouble-free. International Monetary Fund (IMF) was concerned regarding Pakistan’s continued inability to meet tax collection targets yet again espousing fiscal restraint. The government’s assurance, though, that no mini-budget is planned was comforting. The rumor about the probable 10% cut in power tariffs when the circular debt would be cleared is going to be relief for consumers and industry. Other key events of the week included Japan to invest in Reko Diq copper-gold mine project, and Pakistan asking for unilateral tariff concession on 700 Chinese goods to increase exports—both of them as strategic initiatives to diversify economic relations and increase industrial production.
Sector-wise, with the exception of E&Ps and Power, Pharma sector also posted impressive gains, testimony to the buying on defensive lines in otherwise optimistic mood. Spinning of textiles, Leasing, and Woollen mills trailed behind, mood of investors poor due to concerns of export headwinds as also increase in costs. Foreign investors and Banks traded US$29.5 million net against the overall trend. Individual investors and Mutual Funds came to the rescue of the market, however, purchasing US$42.3 million worth of shares—a vote for the medium-term direction of the market.
Week’s weakest performers were K-Electric (KEL), Balochistan Wheels (BWCL), Hub Power Company (HUBC), D.G. Khan Cement (DGKC), and Mari Petroleum (MARI). Weak week performers were Tariq Glass (TGL), Engro Polymer (EPCL), Punjab Oil (POML), Pakistan GasPort (PKGP), and Bannu Woollen (BNWM). Short-term mood remains upbeat in the market. AKD Securities sees the benchmark index continuing to provide an uptrend with a year-end target at 165,215 points. It is powered by favorable earnings visibility of the Fertilizer sector, favorable ROEs of the Banks, and accelerating to some extent cash flows of the E&Ps and OMCs, all in tandem with a fall in interest rates and growing economic stability.
AKD Securities’ top stock recommendations for the rest of the year are: OGDC, PPL, PSO, FFC, ENGROH, MCB, LUCK, DGKC, FCCL, INDU, ILP, and SYS—a mix of value, growth, and sector strength.
The latest-week trend in PSX is the manifestation of a deeper story—one where economic transformation, political statesmanship, and investor sentiment are coming together. While risks continue to emanate, even on the fiscal and external sides, the trajectory of markets is that the capital market of Pakistan is going to enter a new level of maturity with deeper participation and stronger macroeconomic anchors. As overseas investors watch Pakistan surfing the wave of economic revival, the beat in the PSX could be a harbinger of much larger game change with structural change, regional connectivity, and a new survival and growth narrative.