PSX in July: Firestone

August 1, 2025 (MLN): The bulls stampeded through the Pakistan Stock Exchange in July, with the KSE-100 Index surging 11% MoM to a historic closing high of 139,390 points, adding 13,763 points in a single month.

This milestone rally was powered by a combination of geopolitical tailwinds, external account strength, and improving macro fundamentals.

For investors, the sentiment has decisively turned bullish, supported by sustained current account strength, easing inflation, and strategic signals from global powers.

However, with valuations stretched and the monetary policy outlook still cautious, selective profit-taking and rebalancing strategies may come into play in the near term.

Market cap

The KSE-100 market capitalization stood at Rs4.168 trillion, up by 11% from the previous month’s Rs3.75tr while compared to July 2024, the market cap has surged by 69.43%.

In USD terms, the market cap was recorded at $14.73bn, compared to $13.23bn in the prior month, reflecting a surge of 11.32%. While when compared to the previous year, the market capitalization witnessed a notable jump of 67%.

The index return in USD terms stood at 11.30%, compared to last month’s return of 4.31%.

The key catalyst for July’s surge was a breakthrough announcement by U.S. President Donald Trump, which revealed that the United States and Pakistan had reached an agreement to jointly explore Pakistan’s untapped oil reserves.

Yesterday, the United States has reduced the reciprocal tariff rate on Pakistani goods from a previously proposed 29% to 19%, following direct negotiations between the Pakistani government and President Donald Trump’s administration.

This geopolitical development acted as a shot in the arm for equities, particularly energy and exploration-linked stocks.

Adding to the market cheer, S&P Global upgraded Pakistan’s credit rating to ‘B-’ with a Stable outlook, marking the first upgrade in over two and a half years. The rating agency cited Pakistan’s macroeconomic stabilization, fiscal reform efforts, and improved external sector performance as key drivers behind the revision. This move helped solidify investor confidence in the country’s sovereign outlook and long-term financial stability.

On the domestic policy front, the State Bank of Pakistan (SBP) opted to maintain its policy rate at 11%, citing concerns over inflationary pressures stemming from rising gas tariffs and other energy-related adjustments.

While headline inflation continues to decline, the central bank struck a cautious tone to monitor future price trends.

Macroeconomic indicators provided further support to the bullish narrative. Pakistan posted a current account surplus of $2.1 billion for FY25, a dramatic turnaround from the $2.07bn deficit recorded in FY24.

This marked the highest annual surplus in 22 years, with June alone registering a surplus of $328 million. Meanwhile, remittance inflows reached a record-breaking $38.3bn in FY25, rising 27% YoY.

Inflation dynamics showed further improvement. The Consumer Price Index (CPI) for June 2025 stood at 3.2% YoY, down from 3.46% in May, bringing the full-year average inflation to just 4.49%, a sharp drop from 23.41% in FY24, the lowest annual inflation figure since FY16.

From a growth perspective, Pakistan’s real GDP expanded by 2.68% in FY25, showing modest recovery as agriculture and services sectors led the rebound.

In the industrial segment, mixed trends were observed. Large-Scale Manufacturing Index (LSMI) output rose by 2.3% YoY and 7.9% MoM in May, though cumulative LSMI for 11MFY25 remained in the red, declining 1.2% YoY.

Meanwhile, auto sector activity gained traction, with auto-financing rising 20% YoY to Rs277bn in June, and full-year car sales hitting 148,000 units, up 43% YoY, signaling pent-up demand and credit support.

In contrast, cement dispatches in June fell 2.5% YoY to 3.5 million tons, reflecting tepid construction activity.

However, power generation rose by 2.1% YoY, reaching 13,744 GWh, showing signs of demand stability. Petroleum product sales also improved, posting a 2% MoM increase to 1.57 million tons.

On the policy front, the government rolled out the National Tariff Policy 2025–30, aimed at rationalizing tariff structures and boosting export competitiveness over the long term.

Top Index Movers

During the month, Commercial Banks, Fertilizer, Investment Banks and Technology & Communication added 6521.41, 2379.73, 964.80, and 884.73, points, respectively.

On the flip side, Glass & Ceramics, and Refinery lost -68.5, and -52.61, respectively.

Among individual stocks, UBL, FFC, SYS and ENGROH gained 2893.38, 1860.72, 956.52, and 935.21 points, respectively.

On the other hand, PKGP, and AIRLINK dented the index by -95.61, and - -54.18points.

FIPI/LIPI

Foreign investors remained as net sellers, offloading the equities worth $31.67m.

Among them, Foreign Corporations led this activity by selling securities worth $32m while Overseas Pakistanis bought securities worth $2.27m.

The local investors remained net buyers, purchasing equities worth $31.67m.

Among them, Mutual Funds and Individuals bought securities worth $64.78m and $34.68m, respectively. However, Banks, and Other Organizations sold securities worth $54.4m and $20.25m.

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