PSX in August

Market Capitalisation

The index's sideways drift showed up in market capitalisation figures too, though with a small twist. In rupee terms, the KSE-100's total market capitalisation actually slipped from PKR 5.003 trillion in July to PKR 4.995 trillion in August, a decline of roughly PKR 8.1 billion, or 0.16%, even as the index itself notched a modest gain.

The mild divergence likely reflects free-float adjustments and changes in shares outstanding across individual constituents over the month, rather than any broad-based derating of the market.

Measured against August 2025, however, the underlying trend reasserts itself unambiguously: market capitalisation is up PKR 579 billion, or 13.1%, over the past twelve months.

Converted into dollar terms, the picture is close to a mirror image. The KSE-100's market capitalisation eased marginally from USD 18.01 billion in July to USD 18.00 billion in August, a decline of just USD 7.7 million, or 0.04%, helped along by a rupee that firmed slightly against the dollar over the month, from PKR 277.80 to PKR 277.47.

On a year-on-year basis, dollar-denominated market capitalisation has climbed USD 2.33 billion, or 14.9%, from USD 15.67 billion in August 2025, underscoring that Pakistani equities have continued to deliver handsomely for dollar-based investors even after accounting for currency effects.

Zooming into the standalone monthly return series, the KSE-100 delivered a USD-based return of just 0.62% in August, its calmest reading since July's -2.2% and a marked cooldown from the sharp swings that defined the first half of 2026.

The index had whipsawed dramatically earlier in the year, a 9.7% USD-based surge in April followed the brutal -11.4% plunge of March, itself coming off a -8.7% February, before cooling into a steadier 6.8% in May and 3.8% in June.

Economic Backdrop

The macro backdrop offered a broadly encouraging, if mixed, set of signals through the month. Headline inflation eased further, with CPI for July 2026 clocking in at 9.2% year-on-year, down from 11.1% in June, continuing a disinflationary trend that has given the State Bank room to keep policy accommodative.

Pakistan's improving credit narrative was reinforced when Moody's upgraded the sovereign rating to B3 from Caa1, maintaining a stable outlook, in what ratings agencies have increasingly framed as recognition of the country's post-crisis stabilisation.

External accounts told a similarly constructive story. The trade deficit for July stood at USD 3.9 billion, as exports rose a robust 9.5% year-on-year (and 31.1% month-on-month) to USD 2.9 billion, even as imports climbed 18.0% year-on-year to USD 6.9 billion.

The current account deficit narrowed sharply to USD 328 million in July, down 38.0% year-on-year and 59.7% month-on-month, while workers' remittances rose 13% year-on-year and 5% month-on-month to USD 3.6 billion.

Net foreign direct investment jumped to USD 179 million in July, up 265% on the month, and Roshan Digital Account inflows reached a cumulative USD 13.65 billion, of which USD 8.6 billion has been utilised locally.

Liquid foreign exchange reserves rose to USD 22.6 billion as of 27 August (up USD 81.3 million week-on-week), split between USD 17.1 billion held by the State Bank and USD 5.5 billion with commercial banks.

The rupee, meanwhile, held remarkably steady through August, trading in a tight PKR 277.50–277.70/USD band.

On the fiscal side, the FY26 budget deficit came in at PKR 3,313 billion, or 2.6% of GDP, the lowest since FY18.

Central government debt, however, still rose 7.4% year-on-year to PKR 83.4 trillion as of June.

The State Bank's own net profit fell 20% year-on-year to PKR 1.99 trillion in FY26, of which PKR 1.93 trillion was remitted to the federal government as a surplus.

Petroleum sales rebounded 23% year-on-year in July to 1.51 million tons, cement dispatches grew 6% to 4.48 million tons, technology exports rose 18% to USD 417 million, and auto financing expanded 35.2% year-on-year to PKR 386 billion.

Sector and Scrip-wise Movers

On the exchange floor itself, the month's index-point movements were dominated by energy and refining names.

Oil & Gas Exploration Companies led all sectors by a wide margin, contributing 1,126 points to the index, followed by Refinery stocks with 575 points and Oil & Gas Marketing Companies with 294 points, a trio that, between them, added nearly 2,000 points even as several other heavyweight sectors dragged in the opposite direction.

Commercial Banks added a further 105 points, while Engineering, Automobile Assemblers, Real Estate Investment Trusts and Cement rounded out the list of net positive contributors.

On the losing side, Investment Banks, Investment Companies and Securities Companies were the biggest drag, shedding 344 points, followed closely by Technology & Communication (-310 points) and Power Generation & Distribution (-236 points); Pharmaceuticals (-171 points) and Food & Personal Care Products (-89 points) rounded out the heaviest laggards.

At the scrip level, the same energy theme played out stock by stock. Pakistan Petroleum (PPL) led all individual contributors with 432 points, trailed by HBL (420 points), Meezan Bank (400 points), Attock Refinery (346 points) and OGDC (334 points), a mix of exploration majors and a marquee refiner alongside two of the market's largest banks.

Cnergyico, PSO, POL, Mari Petroleum and Bank Alfalah completed the list of the ten biggest positive contributors.

The laggards, by contrast, was led by United Bank Limited, which alone erased 449 points from the index, followed by Engro Holdings (-298 points), Hub Power (-257 points), National Bank of Pakistan (-239 points) and Systems Limited (-201 points); Bank Al Habib, Habib Metropolitan Bank, Engro Fertilizers, AGP and Cherat Cement also featured among the month's ten heaviest drags.

Foreign and Local Investor Flows

Foreign investors turned net sellers of Pakistani equities in August, offloading a net USD 20.1 million (PKR 5.57 billion) worth of shares.

The selling was led by foreign corporates, who pulled out a net USD 28.6 million, with foreign individuals adding a smaller USD 1.7 million in net sales; overseas Pakistanis bucked the trend, however, posting net equity purchases of USD 10.2 million.

On the debt side, foreign flows were marginally positive, with overseas Pakistanis adding a net USD 194,000, taking foreign investors' grand total net position, equity and debt combined, to a net sale of USD 19.9 million for the month.

Local investors absorbed the entirety of that selling. Individual investors were the standout buyers, posting net equity purchases of USD 31.8 million, followed by companies (USD 19.8 million) and mutual funds (USD 8.7 million); broker proprietary trading and other organisations added smaller net purchases.

The counterweight came from banks and DFIs, which were the month's largest net sellers of equities at USD 39.4 million, with insurance companies also net sellers to the tune of USD 5.3 million.

Local participants' combined equity book closed the month at a net purchase of USD 20.1 million, precisely offsetting the foreign outflow.

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