KARACHI: The Pakistan Stock Exchange (PSX) closed the outgoing week on a positive note as improving diplomatic signals surrounding the Middle East conflict lifted investor sentiment and encouraged value-hunting across key sectors, pushing the benchmark KSE-100 index above the 167,000-point level.
According to Arif Habib Ltd (AHL), the KSE-100 index gained 2,248 points, or 1.36 per cent week-on-week, to settle at 167,844.24 points. The rally was largely driven by expectations of progress in US-Iran talks, with Pakistan reportedly playing a role in facilitating backchannel diplomacy. The development eased concerns over possible oil supply disruptions and supported equity market performance.
Auto financing also showed a strong recovery, rising 36.6pc year-on-year to Rs360bn in April, while posting a 4.1pc month-on-month increase amid improving consumer sentiment.
In the debt market, the government exceeded its Pakistan Investment Bonds (PIB) auction target by raising Rs652bn against Rs350bn, with the bulk of participation concentrated in the 15-year tenor.
Index gains 1.36pc on ME peace hopes
Pakistan’s external account, however, remained under pressure. The country posted a current account deficit of $252 million during the first 10 months of FY26, compared to a surplus of $1.66bn in the same period last year. In April alone, the current account recorded a deficit of $324m against a surplus of $1.13bn in March and a deficit of $12m in April 2025, reflecting volatility in external flows.
Oil and gas production also declined during May, with gas output falling 3.2pc week-on-week to 3,028mmcfd and oil production decreasing 1.9pc to 70,215 barrels per day owing to lower field output.
Power generation fell 10pc year-on-year to 9,499 gigawatt hours in April, although positive fuel cost adjustments persisted, with distribution companies seeking an FCA of Rs1.72 per unit due to higher fuel-based generation.
Meanwhile, the treasury bill auction witnessed strong participation and higher yields, with the government raising Rs702bn against a target of Rs450bn. Yields increased across all tenors.
The country’s foreign exchange reserves posted a significant increase, rising to $17.1bn from $15.9bn during the week, mainly due to a $1.2bn increase in State Bank reserves. Import cover improved to 2.7 months.
The rupee remained largely stable against the dollar, closing at Rs278.52 compared to Rs278.61 a week earlier.
Among sectors, banks contributed the most to the benchmark index, adding 1,109 points, followed by fertiliser (653 points), exploration and production (219 points), power (179 points) and cement (178 points).
On the other hand, investment banks dragged the index down by 101 points, followed by auto assemblers (81 points), oil marketing companies (41 points), textiles (35 points) and insurance (24 points).
Top positive contributors included UBL, Fauji Fertiliser Company, Hub Power, Pakistan Petroleum and Bank Al Habib, while Engro Holdings, Pakistan State Oil, Millat Tractors, Sazgar Engineering and Bank Alfalah weighed on the index.
Average daily traded volume declined 39.9pc week-on-week to 498 million shares.
According to AKD Securities Ltd, the market recovered steadily after initial jitters at the start of the week amid concerns over the evolving US-Iran conflict and reports of drone strikes on facilities in the Gulf region.
However, sentiment improved after US Vice President JD Vance confirmed progress in diplomatic talks. Reports of visits by Pakistan’s interior minister and Field Marshal Asim Munir to Tehran to support negotiations also boosted confidence.
On the macroeconomic front, State Bank-held foreign exchange reserves rose by $1.2bn week-on-week owing to IMF disbursements under the Extended Fund Facility and Resilience and Sustainability Facility programmes.
AKD Securities noted that IT exports rose 33pc year-on-year to $423m in April, while urea offtake surged 85pc to 463,000 tonnes.
Other key developments during the week included Pakistan securing a $1.2bn Saudi oil facility and a $320m Asian Infrastructure Investment Bank loan for reconstruction of the N-5 highway. The government also approved the sale of majority stakes in Iesco, Gepco and Fesco and signed 23 deepwater offshore oil and gas exploration agreements, with an initial investment of $82m.
Analysts expect market activity to remain subdued next week owing to Eid holidays and cautious investor sentiment ahead of the FY27 budget announcement. AKD Securities said developments in Iran-US negotiations, oil prices and the federal budget would remain key market triggers, while Prime Minister Shehbaz Sharif’s ongoing visit to China could provide further support to investor sentiment.
Published in Dawn, May 24th, 2026