KARACHI: The outlook for the coming week remains cautiously positive as easing financial conditions and supportive macro signals continue to underpin investor confidence, despite lingering geopolitical risks.
Analysts expect the market to consolidate at higher levels, supported by expectations of further monetary easing, stable currency movement and improving external indicators.
The KSE-100 index ended the week at 185,099 points, up 689 points on a week-on-week basis, as late-session buying helped the market recover from midweek pressure.
Volatility stayed elevated for most of the week, but sentiment improved as regional tensions eased and investors focused on domestic macro developments, falling bond yields and reform-related news flow.
According to AKD Research, positive momentum in the KSE-100 index is likely to continue, driven by expectations of further monetary easing amid an improving external account position and sustained focus on reforms under relative political stability.
AKD Research forecasts the benchmark index to reach 263,800 by December 2026. The brokerage expects investor sentiment to strengthen further on the back of potential foreign portfolio and direct investment inflows, supported by improving relations with the US and Saudi Arabia.
During the week under review, average daily traded volume declined by 24.5 per cent to 1.2 billion shares from 1.6 billion shares in the previous week, reflecting cautious participation amid uncertainty.
On the macroeconomic front, the large-scale manufacturing index rose by 10.4 per cent year-on-year (YoY) in November 2025, extending growth to 6.0 per cent during the first five months of fiscal year 2026.
In the latest Pakistan Investment Bond (PIB) auction, yields declined sharply by 59 to 70 basis points (bps) across two, three, five and 10-year tenors, signalling market expectations of a policy rate cut in the upcoming monetary policy meeting.
Fertiliser sector sales reached a record high in calendar year 2025. The State Bank of Pakistan’s foreign exchange reserves increased by 16 million dollars week on week to 16.1 billion dollars, while the rupee appreciated marginally by 0.03 per cent to close at 279.95 against the US dollar.
Key news during the week included discussions on defence cooperation involving Pakistan, Turkey and Saudi Arabia, plans to develop Port Qasim into a climate-resilient industrial complex, potential joint mining investments with Saudi Arabia, and a proposed 6,000-acre export processing zone on Pakistan Steel Mills land.
Syed Danyal Hussain of JS Research said the index recovered strongly in the final session after remaining under pressure earlier in the week due to geopolitical concerns. He noted that falling bond yields, easing financial conditions and consistent manufacturing growth supported the late rebound.
He added that while private sector credit growth slowed sharply, government borrowing remained strong, reinforcing expectations of lower interest rates ahead.
Nabeel Haroon, vice president international equity sales at Topline Securities, said the modest weekly gain reflected reduced inflows from local mutual funds amid global tensions. He pointed out that sector-wise performance remained mixed, with transport, paper and board, oil and gas exploration and automobile-related stocks among the top performers, while selected textile and synthetic sectors lagged.
Flow-wise, individuals and mutual funds emerged as net buyers, while banks and insurance companies remained net sellers, keeping the market range-bound but biased towards gradual upside.
