KARACHI: The outlook for the coming week remains positive as investors position for further monetary easing and sustained reform momentum. The KSE 100-Index closed the week at a fresh all-time high, and sentiment looks firm ahead of the upcoming monetary policy meeting.
Lower yields, improving external indicators, and steady political conditions continue to support risk appetite. Market participants expect volatility to remain contained, with selective buying likely in rate-sensitive and cyclical sectors.
Any confirmation of policy rate cuts could extend the rally, while profit-taking may appear near record levels. Overall, the balance of triggers points to consolidation with an upward bias in the week ahead.
According to AKD Research, “We foresee the positive momentum in the KSE-100 to continue due to further monetary easing driven by improving external account position and continuous focus on reforms amid political stability.” The brokerage forecasts the index to reach 263,800 by December 2026 and expects investor sentiment to strengthen on the likelihood of foreign portfolio and direct investment inflows, supported by improved relations with the US and Saudi Arabia.
During the week, the KSE-100 advanced by 4,068 points, or 2.2 per cent week-on-week (WoW), to close at 189,167 points. Market participation improved, with average daily traded volume rising by 8.7 per cent to 1.3 billion shares from 1.2 billion shares a week earlier.
Momentum drew support from easing geopolitical tensions and a sharp decline in Treasury bill yields to single-digit levels for the first time in four years. Cut-off yields fell by 30, 25, 21, and 16 basis points (bps) across one, three, six, and 12-month maturities.
Positive diplomatic engagements with China, the US, the UK, and Saudi Arabia further lifted confidence. On the macro front, the current account posted a deficit of $244 million in December 2025, while foreign direct investment recorded a net outflow of $135 million. Power generation rose by 8.8 per cent year-on-year (YoY), while the information technology sector posted its highest-ever monthly exports at $437 million, up 26 per cent. State Bank foreign exchange reserves increased by $16 million to $16.1 billion, while the rupee appreciated by 0.03 per cent to close at 279.86 against the dollar.
Syed Danyal Hussain of JS Research said the index sustained bullish momentum as falling yields reinforced expectations of further policy easing. He noted that average daily turnover improved sharply and highlighted the return of Treasury bill yields to single digits as a key catalyst. He also pointed to macro headwinds, including a wider current account deficit and weaker foreign investment in the first half of the fiscal year.
Nabeel Haroon, vice president international equity sales at Topline Securities, said the weekly gain reflected investor expectations of a policy rate cut, alongside supportive auction results. He added that Fitch’s affirmation of Pakistan’s long-term rating at B minus provided reassurance.
Sector-wise, refineries, fertilisers, leather and tanneries, insurance, and property led gains, while transport, jute, woollen, technology and communication, and engineering lagged. Mutual funds and individuals emerged as net buyers, while foreigners and companies booked profits.
Company-wise, AICL, ATRL, FATIMA, SAZEW and ENGROH outperformed, while PIOC, KTML, TGL, SYS and PAEL trailed, reflecting selective rotation rather than broad-based weakness.
