KARACHI: The KSE-100 index is expected to extend its bullish momentum in the coming week, supported by expectations of further monetary easing, improving macroeconomic indicators and sustained reform momentum amid political stability, according to brokerage firm AKD Research.
Investor sentiment is likely to strengthen on hopes of foreign portfolio and direct investment inflows, driven by improved diplomatic and economic engagement with the US and Saudi Arabia.
AKD Research forecasts the benchmark index to reach 263,800 by December 2026 and continues to favour OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP and SYS as top picks, citing attractive valuations and earnings visibility.
The equity market posted a strong performance during the week, with the KSE-100 Index rising by 5,375 points, or 3.0 per cent week-on-week, to close at 184,410. Trading activity improved, as average daily traded volume increased by 25 per cent to 1.6 billion shares, compared with 1.3 billion shares in the previous week. The market witnessed some profit-taking in the last couple of sessions.
The rally was underpinned by positive macroeconomic signals, easing inflation expectations and improving external account indicators. Sentiment also benefited from reports of enhanced bilateral engagement with several countries and renewed momentum on regional cooperation initiatives, including progress related to the next phase of the China-Pakistan Economic Corridor (CPEC).
Remittances for December 2025 stood at $3.6 billion, showing a 17 per cent year-on-year (YoY) increase, while cumulative remittances for the first half of fiscal year 2026 reached $19.7 billion, up 11 per cent YoY.
On the fiscal side, central government debt declined by Rs345 billion during the first five months of fiscal year 2026 to Rs77.5 trillion, aided by lower borrowing needs and profit transfers.
In the fixed income market, Treasury bill yields fell across all tenors, declining by 29 to 34 basis points, reflecting market expectations of a policy rate cut following easing inflation.
State Bank of Pakistan foreign exchange reserves increased by US$141 million week-on-week to $16.1 billion as of January 2, while the rupee appreciated marginally by 0.03 per cent to close at 280.02 against the US dollar.
Sector-wise, transport, pharmaceuticals, insurance, refineries and leather and tanneries led the gains, while textile spinning and a few smaller sectors underperformed. Flow data showed strong net buying by mutual funds and companies, while banks and foreign investors booked profits.
On the corporate front, AICL, MCB, ABOT, HALEON and SAZEW emerged as top performers, whereas PSEL, SSOM, GHGL, DHPL and ISL lagged.
Syed Danyal Hussain, an analyst at JS Research, said the rally remained largely bank-led, with banks contributing more than half of the index gains, supported by falling yields and expectations of policy easing.
He highlighted the improvement in remittances, declining public debt and softer power tariffs as positive structural developments.
Separately, Nabeel Haroon, an analyst at Topline Securities, attributed the weekly gain to aggressive mutual fund buying on fresh equity allocations and rising optimism over an upcoming policy rate cut, noting a sharp increase in traded volumes and values as investor confidence improved.
