KARACHI: The Pakistan Stock Exchange (PSX) enters the coming week with cautious optimism as macro signals remain supportive, even though geopolitical risks and local security concerns continue to cap upside. Investors will watch external developments closely, especially Middle East tensions and foreign inflows, while domestic cues such as inflation trends, yields and policy signals are likely to guide direction.
The KSE-100 index ended the outgoing week almost flat, but underlying data points suggest resilience. Market participants expect selective buying if stability holds and reform momentum continues.
According to AKD Research, positive momentum in the KSE-100 is likely to continue due to improving macroeconomic indicators and a sustained focus on reforms amid political stability. The brokerage 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. AKD Research noted that while short-term volatility may persist, the medium-term outlook remains constructive.
The market trended upwards for most of the week before a sharp correction of 3,703 points on Friday erased earlier gains. The benchmark index closed at 184,130 points, down 45 points on a week-on-week basis. Escalating tensions between the United States and Iran, along with adverse domestic security developments, triggered the late sell-off. Earlier, sentiment improved after the prime minister announced an industrial relief package.
Record monthly exports of 3.06 billion dollars in January 2026 also helped. This led to a 7 per cent year-on-year (YoY) drop in the trade deficit. Inflation in January stood at 5.8 per cent YoY, below expectations. Cement sector offtakes reached a five-year high of 4.54 million tonnes, up 13 per cent, driven by stronger sea exports.
Oil marketing companies reported a 6.0 per cent rise in sales to 1.35 million tonnes. Banking sector deposits grew by 0.7 per cent week-on-week (WoW). However, treasury bill and Pakistan Investment Bond yields rose by 15 to 40 basis points (bps) in the first auction after the central bank kept rates unchanged.
Market activity softened despite supportive data. Average daily traded volume fell 12 per cent to 1.2 billion shares from 1.4 billion shares last week. The rupee gained marginally and closed at 279.71 against the dollar. Key developments included the UAE rolling over a $2 billion loan for one month, Pakistan seeking a two-year extension of a $1.2 billion Saudi oil facility, and Barrick reviewing the Reko Diq project due to security concerns.
Federal tax revenues rose 16 per cent to Rs1,015 billion in January. Private sector credit expanded by Rs589 billion in the fiscal year to date. Power, jute, leather, investment companies and real estate trusts led gains. Chemicals, engineering, tobacco, exploration and cement lagged. Mutual funds, brokers and companies were net buyers, while banks and foreign investors sold.
Nabeel Haroon, vice president international equity sales at Topline Securities, said the index closed flat due to a lack of triggers, though local institutions continued to provide support.
Syed Danyal Hussain of JS Research said volatility dominated the week, but stable inflation and easing trade pressures helped the market hold ground.
