KARACHI: The outlook of stocks for the coming week remains positive as easing monetary conditions, improving external accounts and steady reform momentum continue to support investor confidence.
According to AKD Research, sentiment is expected to strengthen further on prospects of foreign portfolio and direct investment inflows, while the benchmark KSE-100 index is forecast to extend its upward trajectory towards 263,800 by December 2026.
The Pakistan Stock Exchange (PSX) delivered a strong performance during the week, as the KSE-100 Index surged by 6,634 points, or 3.8 per cent week on week, to close at a fresh all-time high of 179,035 points, supported by a favourable new year effect and a softer-than-expected December 2025 inflation reading of 5.6 per cent, which reinforced expectations of further monetary easing.
Market sentiment also benefited from renewed optimism in the energy space after Oil and Gas Development Company Limited announced an oil and gas discovery in the Nashpa Block, where a second formation yielded 4.1 thousand barrels per day of oil and 10.5 million cubic feet per day of gas, adding to an earlier discovery announced in December 2025.
Oil marketing companies also reported stronger activity, with sector volumes rising 6 per cent year on year in December 2025. Overall market participation improved, with average daily traded volume rising 9.7 per cent week on week to 1.3 billion shares, compared with 1.1 billion shares in the previous week.
On the macroeconomic front, Pakistan’s trade deficit widened by 24 per cent year on year to $3.7 billion in December 2025, while GDP growth stood at 3.7 per cent year on year during the first quarter of FY26.
The State Bank of Pakistan’s (SBP) foreign exchange reserves increased by $13 million week on week to $15.9 billion as of December 26, while the rupee appreciated marginally by 0.02 per cent against the US dollar to close at 280.11.
Other key developments during the week included the central bank purchasing US$6.9 billion from the currency market over the past 12 months, the Federal Board of Revenue collecting Rs6.2 trillion in the first half of FY26 but missing its target by Rs338 billion, Pakistan exploring a $1 billion liability settlement through UAE investment in Fauji Group, renewed US interest in partnership with Pakistan in locomotive sales and mineral exploration, and plans to launch Pakistan’s first Panda bond in China.
Sector-wise, transport, property, vanaspati and allied industries, oil and gas exploration companies, and pharmaceuticals led the gains, rising 19.3 per cent, 17.4 per cent, 8.0 per cent, 6.6 per cent and 6.5 per cent week on week, respectively. In contrast, jute, woollen, cement, real estate investment trusts and textile composite stocks underperformed, declining by up to 2.6 per cent during the week.
Flow data showed strong local participation, with Mutual Funds and Companies posting net buying of $24.5 million and US$9.4 million, while Foreigners and Banks were net sellers of $18.8 million and $10.7 million, respectively.
At the company level, JVDC, SSOM, UBL, FFL and EFERT emerged as top performers, while DGKC, CHCC, KTML, KOHC and MLCF lagged.
Syed Danyal Hussain of JS Research said the rally was broad-based, led by banks, followed by exploration and production and fertilizer stocks, adding that improving inflation trends and steady economic growth were key positives despite pressures on the external account.
Nabeel Haroon, vice president at Topline Securities, noted that strong buying by local mutual funds drove the rally, while higher trading volumes reflected improving risk appetite at the start of the year.
