KARACHI: Pakistan equities are expected to remain stable in the coming week as investors adopt a cautious stance ahead of the federal budget announcement, awaiting greater clarity on fiscal and taxation measures. Market participants will also closely monitor developments in US-Iran relations, with any further easing of geopolitical tensions likely to provide additional support to investor sentiment.
Arif Habib Ltd Research noted that the KSE-100 Index is currently trading at an attractive price-to-earnings ratio of 8.1 times, offering a dividend yield of around 6.3 per cent. Preferred stocks include OGDC, PPL, FFC, Lucky Cement, National Bank of Pakistan, Hub Power Company, Pakistan State Oil and Attock Refinery.
The Pakistan Stock Exchange (PSX) ended the holiday-shortened week on a strong note, with the benchmark KSE-100 Index gaining 6,119 points, or 4.0 per cent week-on-week (WoW), to close at 173,963 points. Improved investor sentiment followed the agreement between the US and Iran to extend their ceasefire for 60 days, easing concerns over potential disruptions to global oil supplies and supporting risk appetite across regional markets.
Energy prices provided additional relief to consumers and businesses. The government reduced the price of Motor Spirit (petrol) by Rs22 per litre effective May 30, 2026.
Similarly, high-speed diesel prices were also lowered by Rs22 per litre. The decrease was mainly driven by a sharp decline in ex-refinery diesel prices, although part of the benefit was offset by a higher petroleum levy and increased IFEM charges.
Pakistan’s energy sector also reported operational improvements during the third week of May. Gas production increased by 3.4 per cent week-on-week to 3,130 million cubic feet per day, largely due to higher output from the Uch and Kandhkot fields. Oil production rose by 1.0 per cent to 70,924 barrels per day.
On the external front, Pakistan secured nearly $11 billion in foreign loans during the first 10 months of FY2025-26, representing an increase of 83 per cent compared with the corresponding period of the previous fiscal year, according to data released by the Economic Affairs Division. The increase reflects stronger inflows from bilateral and multilateral partners as the country seeks to strengthen its external financing position.
The energy supply outlook also improved after Pakistan secured its third Qatari LNG cargo. The tanker Fuwairit safely crossed the Strait of Hormuz and entered Pakistani waters, with docking at the Engro LNG Terminal scheduled during the week. The development eased concerns about potential supply disruptions amid tensions in the Gulf region.
Meanwhile, the Pakistani rupee remained largely stable against the US dollar, closing at Rs278.5 per dollar compared with Rs278.52 a week earlier, indicating continued stability in the foreign exchange market.
Analysts said the extension of the US-Iran ceasefire, lower fuel prices, improved energy supplies and stable currency conditions helped lift market confidence during the week. However, attention is now shifting to the upcoming federal budget, which is expected to be the key driver of market direction in the near term.
