KARACHI: The Pakistan Stock Exchange (PSX) remained under pressure during the outgoing week as investors adopted a cautious stance amid uncertainty over US-Iran negotiations and ahead of the federal budget for FY27, due to be unveiled on June 10.
The benchmark KSE-100 index closed at 170,479 points, down 3,484 points, or 2 per cent, on a week-on-week basis, reflecting subdued sentiment and profit-taking across key sectors.
Analysts attributed the decline to a combination of geopolitical concerns, budget-related uncertainty, and rising inflation, which clouded the near-term market outlook.
According to Topline Securities, the KSE-100 index fell 2pc due to a lack of meaningful progress in US-Iran peace talks and uncertainty over fiscal measures in the upcoming budget, which curtailed risk appetite. Investors remained wary of potential regional escalation, prompting mixed trading and limiting fresh positions.
Profit-taking hits key sectors as inflation surges to 11.66pc; trade deficit widens year-on-year
Inflation, measured by the Consumer Price Index (CPI), rose to 11.66pc in May, up from 10.89pc in April and the highest level since June 2024. Meanwhile, the country’s trade deficit narrowed to $2.58 billion in May, down 14pc year-on-year and 39pc month-on-month, supported by a decline in imports.
However, the trade deficit swelled by 17.48pc to $34.76bn in July-May 2025-26, up from $29.58bn in the corresponding period last year.
Market activity remained moderate, with average daily traded volume and value standing at 623 million shares and Rs27bn, respectively.
Flow data showed mutual funds and foreign corporates emerging as major sellers, offloading equities worth $14m and $8.5m, respectively. Individuals, insurance companies and local corporates were net buyers, purchasing shares worth $7.1m, $3.7m and $2.7m.
Arif Habib Ltd (AHL) noted that the market remained range-bound throughout the week as investors monitored developments in US-Iran negotiations. The brokerage highlighted a series of economic and sector-specific indicators that shaped sentiment.
Fertiliser data showed provisional urea offtake down 3pc year on year in May to 463,000 tonnes, although cumulative sales for the first five months of the calendar year 2026 rose 8pc to 1.91 million tonnes. DAP offtake fell sharply by 38pc to 59,000 tonnes, largely due to elevated prices.
In the energy sector, refinery uplift fell 7pc year-on-year, driven by lower demand for high-speed diesel (HSD) and furnace oil. HSD uplift fell 19.1pc, while petrol sales rose 4.3pc. Oil marketing companies’ sales fell 23pc year-on-year and 14pc month-on-month in May, reflecting the impact of higher fuel prices.
Pakistan’s proven oil reserves increased by 6pc year on year to 253 million barrels by December 2025, supported by new discoveries and higher output from key fields. Natural gas reserves also rose by 4pc to 18,854 billion cubic feet. However, weekly production data showed a decline in both oil and gas output.
The cement sector remained weak, with despatches declining 21pc year-on-year in May to 3.83 million tonnes. However, cumulative dispatches during the first 11 months of FY26 increased 7pc from a year earlier.
AHL further noted that May exports rose 1.3pc year on year to $2.7bn, while imports fell 6.6pc to $5.3bn. State Bank-held foreign exchange reserves increased by $43.4m to $17.2bn, providing an import cover of 2.76 months. The rupee remained largely stable, closing at Rs278.41 against the dollar.
AKD Securities said market volatility was driven primarily by uncertainty surrounding US-Iran talks and movements in international oil prices. Brent crude gained 5.9pc during the week, reaching $98.9 per barrel, while inflation moved above the policy rate, resulting in positive real interest rates for the first time in more than two years.
Other key developments included the government’s reported macroeconomic assumptions for FY27, the securing of additional LNG cargoes, an oil and gas discovery by OGDC, and Nepra’s approval of a Rs1.99 per unit quarterly tariff adjustment relief.
Looking ahead, analysts expect trading to remain cautious and largely range-bound until greater clarity emerges on budget measures and regional geopolitical developments. Any positive breakthrough in US-Iran negotiations, together with stability in global oil prices, could improve investor sentiment.
Despite recent weakness, analysts believe valuations remain attractive, with the KSE-100 index trading at a price-to-earnings ratio of around 7-8 times and offering a dividend yield exceeding 6pc.
Published in Dawn, June 7th, 2026