KARACHI: The Pakistan Stock Exchange (PSX) maintained its bullish momentum during the outgoing week, with the benchmark KSE-100 index briefly crossing the 180,000 mark for the first time since February, before the onset of the Middle East conflict.
However, the index failed to sustain this level and retreated in the final session of the week on renewed geopolitical concerns in the Middle East after Israel intensified attacks in Lebanon in sheer violation of the Islamabad MoU signed between the US and Iran which agreed prompt ending of violence in the entire region.
Investor sentiment remained largely positive on expectations of progress in US-Iran diplomacy, easing concerns over regional tensions and helping lower global oil prices. However, the scrapping of a scheduled round of US-Iran talks in Switzerland amid escalating Israeli hostilities in the region triggered profit-taking on Friday, the last session of the week.
According to Topline Securities, the KSE-100 index gained 6,523 points, or 3.8pc week-on-week, to close at 178,922.75.
Late profit-taking on renewed ME tensions drag index below 180,000-milestone
Key macroeconomic indicators released during the week provided support to the market. Pakistan recorded a current account surplus of $459 million in May, compared to a deficit of $276m in April. Net foreign direct investment rose to $214m from $54m a month earlier, while the real effective exchange rate increased to 106.15 in May from 105.84 in April.
Market participation also improved significantly. Average daily trading volume stood at 1.14 billion shares, while average daily turnover reached Rs63bn.
In terms of investor flows, insurance companies and individual investors were net sellers, offloading equities worth $58m and $10m, respectively. Mutual funds and corporates remained net buyers, purchasing shares worth $65m and $7m.
Arif Habib Ltd (AHL) attributed the week’s gains to optimism surrounding the federal budget and expectations of progress in US-Iran relations. However, reports of ceasefire violations and renewed regional uncertainty tempered the rally in the final trading session.
The State Bank’s Monetary Policy Committee left the policy rate unchanged at 11.5pc, citing a balance between persistent inflationary pressures and manageable external sector risks.
Economic data released during the week showed large-scale manufacturing output grew 6.1pc year-on-year in April, although it declined 8.3pc on a monthly basis. Despite the monthly decline, large-scale manufacturing expanded 6.4pc during the first 10 months of FY26.
Technology exports increased 13pc year-on-year to $373m in May and accounted for 45pc of total services exports.
Power generation fell 0.9pc year-on-year to 12,638 gigawatt-hours in May. On a monthly basis, however, it rose 33pc due to seasonal factors. Cumulative generation during 11MFY26 increased 1.6pc to 115,268 GWh.
In the latest Pakistan Investment Bonds auction, the government raised Rs649bn against a target of Rs350bn. Yields declined by 34 to 116 basis points across the two-, three-, five- and 10-year tenors, while bids for the 15-year bond were rejected. The five-year tenor attracted the largest participation.
Meanwhile, oil and gas production remained under pressure. Gas output fell 2.2pc week-on-week to 2,955 million cubic feet per day, while crude oil production declined 3.1pc to 66,707 barrels per day.
The country’s liquid foreign exchange reserves rose by $70m to $22.7bn as of June 18. State Bank reserves stood at $17.2bn, while commercial bank holdings increased to $5.5bn. Total reserves provide import cover for around 2.7 months.
The rupee appreciated marginally by 0.02pc during the week to close at Rs278.25 against the dollar.
Banking stocks contributed the most to the benchmark index’s gains, adding 2,047 points. They were followed by cement, investment banking, exploration and production, and power sector shares. Among individual stocks, UBL, Engro Holdings, Hub Power, Pakistan Petroleum and OGDC were the largest positive contributors.
According to AKD Securities, market sentiment was further supported by a budget viewed favourably by key sectors, including cement, steel, refineries, textiles, pharmaceuticals and technology, alongside reductions in super tax for individuals and corporates.
Looking ahead, analysts expect trading activity to remain cautious due to Muharram holidays and continued uncertainty in the Middle East. Nevertheless, improving macroeconomic indicators, lower bond yields and expectations of strong corporate earnings are expected to provide support.
The KSE-100 index is currently trading at a price-to-earnings ratio of 8.3 times, offering a dividend yield of 6.1pc.
Published in Dawn, June 21st, 2026