KARACHI: The Pakistan Stock Exchange (PSX) extended its recovery rally on the back of renewed buying in the outgoing week, amid growing optimism about easing geopolitical tensions, as a 60-day agreement between Iran and Oman on shipping through the Strait of Hormuz reached the final stages of its finalisation.

The benchmark KSE-100 index rose 5,336 points, or 3.03 per cent, week on week to close at 181,430, as easing geopolitical tensions, robust corporate earnings and improving economic indicators lifted investor sentiment.

According to Arif Habib Ltd (AHL), optimism about a potential improvement in regional tensions and a steady start to the earnings season supported the market throughout the week. The brokerage said the outlook would continue to be shaped by geopolitical developments and corporate results.

The market also drew support from a decline in inflation. Consumer price inflation slowed to 9.2pc year-on-year in July from 11.1pc in June, bringing inflation back into single digits for the first time in four months.

Hormuz deal hopes, slowing inflation lift investor sentiment

Pakistan recorded a trade deficit of $3.9 billion in July, according to the Pakistan Bureau of Statistics. Exports rose 9.5pc year-on-year, and 31.1pc month-on-month, to $2.9bn, while imports increased 18pc year-on-year to $6.9bn.

In the treasury bill auction held on Wednesday, the government raised Rs939.1bn against a target of Rs400bn. Cut-off yields declined 4-10 basis points across all tenors except the one-month paper, while the six-month tenor attracted the largest amount at Rs325.3bn, noted Topline Securities Ltd.

Petroleum sales also posted a strong recovery in July, with volumes rising 23pc year-on-year to 1.51 million tonnes and 20pc month-on-month. Excluding furnace oil, oil marketing companies’ sales volumes increased 18.5pc year-on-year, the highest since 2021, supported by lower fuel prices, improved farm economics and recovering automobile demand.

Refinery upliftment rose 47.7pc year-on-year during the month. High-speed diesel sales increased 44pc to 600,000 tonnes, while petrol rose 34.5pc to 263,000 tonnes. Total refinery production increased 8.2pc to 962,000 tonnes.

Cement despatches increased 6pc year-on-year to 4.48m tonnes in July. Sales in the north rose 10pc to 3.1m tonnes, while those in the south declined 1pc to 1.39m tonnes. Local consumption increased 7pc month-on-month, whereas exports fell 11pc.

Fertiliser demand remained mixed. Urea offtake fell 5pc year-on-year to 580,000 tonnes, while DAP offtake declined 13pc to 93,000 tonnes as farmers continued to shift towards nitrogen-based fertilisers. During the first seven months of calendar 2026, urea offtake rose 4pc to 3.09m tonnes, while Calcium Ammonium Nitrate (CAN) increased 18pc to 77,600 tonnes. Nitrogen-Phosphate (NP) offtake, however, fell 78pc to 11,100 tonnes.

Petroleum prices declined during the week under the daily pricing mechanism based on the seven-day average of Platts prices. Petrol fell Rs6.33 per litre to Rs329.82 and high-speed diesel dropped Rs10.68 to Rs382.36. Dealer and oil marketing company margins remained unchanged.

Foreign exchange reserves increased to $22.5bn as of Aug 5, up $32.5m from the previous week.

The State Bank of Pakistan’s reserves stood at $17bn, while commercial banks held $5.4bn, taking import cover to 2.51 months. The rupee appreciated 0.2pc against the dollar to close at Rs277.7.

Banks led sectoral gains, contributing 1,716 points to the index, followed by cement with 705 points, fertiliser 650 points, exploration and production companies 547 points, and power 331 points. Synthetic and rayon, miscellaneous, paper and board, textile composites and transport were among the sectors weighing on the index.

Among individual stocks, Fauji Fertiliser Company, Habib Bank, Meezan Bank, Mari Energies and Hub Power made the largest positive contributions, adding 504, 433, 411, 297 and 292 points, respectively. Maple Leaf Cement, Ibrahim Fibres, Nestlé Pakistan, Pakistan Services and Shifa International were the biggest negative contributors.

Average daily volumes stood at 749.3m shares, down 9.9pc week-on-week, while average traded value rose 7pc to $121.9m.

AKD Securities said the market gained momentum amid hopes of a US-Iran understanding and talks between Iran and Oman aimed at restoring the Strait of Hormuz to its pre-conflict position. The brokerage said oil prices fell below $80 per barrel before settling around $82 on Friday.

It added that strong banking-sector results supported sentiment, while the July trade deficit remained 15pc lower month-on-month. However, uncertainty over the Red Sea route and higher-than-expected inflation tempered gains.

Analysts put the forward price-to-earnings ratio at 8.0 times and expect the market to improve further if economic indicators strengthen, geopolitical tensions ease and corporate earnings remain supportive.

Published in Dawn, August 9th, 2026