Shariah-Compliant Stocks on PSX 2026: Full List, KMI-30, and How to Screen for Halal Investing
For a huge portion of Pakistani investors, whether a stock is Shariah-compliant matters as much as whether it's a good buy. In 2026 the compliant universe on the Pakistan Stock Exchange has grown to around 241 companies under the PSX-KMI All Share Index, with the KMI-30 tracking the largest and most liquid of them.
This guide covers the actual screening rules the SECP uses, which sectors are automatically excluded, how the KMI-30 differs from the KSE-100 in practice, and the mechanics of purifying any impermissible income that leaks through.
What makes a stock Shariah-compliant on PSX
A company gets flagged as compliant only after clearing TWO separate screens: business screening and financial screening. Both are laid out in the SECP's "Guidelines for Shariah-Compliant Investing."
Business screening — the sector rules
A company is automatically excluded if its core business involves any of:
- Conventional banking or interest-based finance
- Conventional insurance (Takaful is fine)
- Alcohol, tobacco, gambling, pork
- Weapons for offensive use
- Adult entertainment or non-Islamic media
- Interest-based leasing or investing
That one filter alone knocks out roughly half of the KSE-100 — most of the big conventional banks (HBL, UBL, MCB, ABL, BAFL) are non-compliant on this rule alone, though some have Islamic banking subsidiaries.
Financial screening — the ratio rules
Even a company doing permissible business fails if its balance sheet crosses these limits:
- Interest-bearing debt to total assets: less than 37%
- Non-compliant investments to total assets: less than 33%
- Non-compliant income to total revenue: less than 5%
- Illiquid assets to total assets: more than 25% (so pure cash-holding companies are excluded)
- Net liquid assets vs market cap: market cap must exceed net liquid assets per share
Because these ratios move quarter to quarter, a stock that was compliant last review can drop off the list — and vice versa. This is why the KMI indices are rebalanced twice a year.
KMI-30 vs PSX-KMI All Share Index
Two indices track the compliant universe:
- KMI-30: the 30 largest Shariah-compliant stocks by free-float market cap. Think of it as the KSE-30's halal counterpart. Well-known constituents typically include names like Meezan Bank, Engro Corp, Lucky Cement, Pakistan Petroleum, Fauji Fertilizer, and OGDC (depending on the review).
- PSX-KMI All Share Index: covers roughly 241 compliant stocks, providing a much broader universe for diversification.
Both are recalculated with the semi-annual review. You can find the current constituent list on the PSX All Shares Islamic Index page or through Islamic mutual fund fact sheets.
Sector distribution — where compliant capital lives
After the screens, compliant PSX names cluster in a handful of sectors:
- Cement: Lucky, DG Khan, Fauji Cement, Cherat, Maple Leaf
- Fertilizer: Fauji Fertilizer, Engro Fertilizer, Fatima Fertilizer
- Oil & Gas (E&P): OGDC, PPL, POL, Mari Petroleum
- Power & IPPs: Hub Power, K-Electric (depending on ratio compliance any given quarter)
- Pharmaceuticals: GlaxoSmithKline, Searle, Highnoon Labs, AGP
- Automobiles & Parts: Indus Motors, Millat Tractors, Honda Atlas
- Textiles: Nishat Mills, Interloop, Gul Ahmed
- Islamic banks: Meezan Bank, BankIslami Pakistan, Dubai Islamic Bank Pakistan
- Technology: Systems Ltd, TRG Pakistan (subject to ratio compliance)
Notably absent: virtually all conventional banks, insurance companies, and any leveraged financial services businesses.
Purification — the concept most retail investors skip
Even a Shariah-compliant company may earn a small amount of impermissible income (e.g., interest on a bank deposit). Because compliance allows up to 5% non-permissible income, some of that income eventually reaches you as dividends.
Purification is the practice of donating that impermissible portion to charity — not keeping it as personal gain. The compliant company itself will typically disclose a per-share purification amount or a percentage of dividend to purify in its annual Shariah advisory report. For example, if the disclosure says "purify 2.5% of dividend received," you calculate:
> Dividend received × 2.5% = amount to donate
That amount goes to a legitimate charity (not to a family member, not to an interest-earning fund). The remaining 97.5% is yours to keep.
Some investors purify quarterly, others annually. What matters is doing it deliberately — treating the estimated amount as not yours the moment it arrives.
Zakat on PSX stock holdings
Separately from purification, Zakat applies to your equity portfolio. The mainstream Hanafi view treats long-term investment shares (held for capital appreciation and dividends) using the nisab calculation on the current market value of the compliant portion of the shares, at 2.5% annually.
High-frequency trading positions (held as inventory for resale) may be Zakatable at 2.5% of the full market value. Consult a scholar for your specific case — but do not skip it entirely.
The Sanity check: whether or not stocks are Zakatable is not about whether the underlying company pays Zakat itself. It's about whether YOU as the shareholder hold them long enough for Zakat to attach.
Halal mutual funds and Islamic ETFs
If you don't want to manage the screening and purification yourself, the alternative is a Shariah-compliant equity fund. Every major AMC in Pakistan offers at least one — Meezan Islamic Fund, Al Meezan Mutual Fund, NBP Islamic Stock Fund, HBL Islamic Stock Fund, and others.
These funds:
- Only hold compliant stocks (a Shariah Board audits holdings)
- Handle purification at the fund level
- Issue you a purified dividend / redemption amount
- Typically charge 2–2.5% annual management fee
The trade-off vs holding direct compliant stocks: convenience + built-in purification vs the fees. Over 5–10 years the fee drag can be significant, so many serious retail investors go direct and manage purification themselves.
How to build a compliant portfolio starting today
- Confirm the current KMI-30 constituent list on the PSX site before buying anything — do not rely on old lists
- Start with 5-8 stocks across at least 3 different compliant sectors (fertilizer, cement, oil & gas, and one Islamic bank is a common core)
- Set a purification calendar — quarterly or annual, aligned with dividend receipts
- Track Zakat separately based on your holding period and intent
- Recheck the compliant list every 6 months after each KMI review — companies do drop off
Where PSX Invest fits in
PSX Invest doesn't currently filter its opportunity feed by KMI-30 status, but you can build a fully compliant watchlist by only adding stocks that appear on the current KMI review. The AI signals, technical analysis, and target prices all work identically on Shariah-compliant stocks — the compliance question is upstream (which universe you pick from), not about the technical or fundamental analysis itself.
If enough of you want it, we'll add a KMI-30 filter toggle on the opportunity feed and watchlist. Send us feedback with your ticker priority.
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This article is educational, not a Shariah ruling. For personal decisions about compliance, purification amounts, or Zakat, consult a qualified scholar. Refer to the [SECP Shariah-Compliant Investing Guidelines](https://www.secp.gov.pk/) and the latest KMI review from PSX for authoritative constituent lists.
