KARACHI: The KSE-100 Index faces near-term pressure as two key catalysts dominate investor attention heading into the coming week: the trajectory of US-Iran nuclear negotiations and the upcoming federal budget for FY27, scheduled for 10 June.
AKD Research maintains a constructive longer-term outlook, forecasting the benchmark index to reach 263,800 by December 2026, supported by a forward price-to-earnings ratio of 7 times. Top picks cited by AKD include OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP and SYS. International oil prices remain a closely watched variable, with Brent crude rising 5.9 per cent week-on-week (WoW) to $98.9 per barrel during the outgoing week.
The benchmark KSE-100 Index shed 3,484 points, or 2.0 per cent, WoW to close at 170,479 points on Friday, as sentiment weakened on reports of a possible halt in US-Iran talks following an Israeli strike on Lebanon. Inflation data added to the caution: consumer price index for May 2026 rose to 11.66 per cent year-on-year (YoY) from 10.89 per cent in April, pushing real interest rates into positive territory for the first time in 26 months.
Nabeel Haroon, vice president of international equity sales at Topline Securities, attributed the decline primarily to the lack of meaningful progress in US-Iran peace negotiations and investor wariness ahead of the budget announcement, both of which prompted profit-taking and curtailed risk appetite.
Average daily traded volume fell 21.6 per cent WoW to 736 million shares.
On the macroeconomic front, Pakistan’s trade deficit for May 2026 narrowed 14 per cent YoY and 39 per cent month-on-month (MoM) to $2.6 billion, aided by a 6.6 per cent YoY decline in imports. The Federal Board of Revenue’s provisional tax collection for the first eleven months of FY26 reached Rs11.2 trillion, reflecting a Rs25 billion shortfall against the revised target.
State Bank of Pakistan foreign exchange reserves rose $43 million week-on-week to $17.2 billion as of May 29. The government has set a Rs290 per dollar exchange rate assumption for the FY27 budget, alongside a GDP growth target of 4 per cent and an inflation projection of 8.2 per cent.
Other notable developments included Pakistan securing three Qatari and one spot LNG cargo, the Federal Competition Commission questioning Punjab’s royalty levy on cement, OGDC announcing an oil and gas discovery at Bobi Deep-1, and Nepra approving a Rs1.99 per unit relief in quarterly tariff adjustment.
Sector performance was mixed. Leasing, Synthetic and Rayon, and Modarabas led gainers, rising 11.2 per cent, 10.2 per cent and 4.0 per cent respectively. Power generation, oil and gas exploration, and vanaspati and allied industries were the worst performers, falling 3.1 per cent, 2.9 per cent and 2.8 per cent, respectively.
Cement dispatches for May 2026 dropped 21 per cent YoY to 3.8 million tons, largely due to Eid holidays and elevated fuel prices. OMC offtakes fell 23 per cent YoY to 1.17 million tonnes, dragged by weaker HSD demand.
At the company level, top performers included HCAR, up 11.6 per cent, PSX, up 11 per cent, GHNI, up 6.9 per cent, IBFL, up 6.4 per cent, and PGLC, up 5.4 per cent. Laggards included GHGL, down 5.4 per cent, NBP, down 5.2 per cent, APL, down 5.1 per cent, ENGROH, down 5.1 per cent, and PKGS, down 4.9 per cent.
On the flows side, mutual funds and foreign corporates were the principal sellers, offloading a net $14 million and $8.5 million respectively, according to Topline Securities. Individuals, insurers and local companies were the main buyers, with net purchases of $7.1 million, $3.7 million and $2.7 million, respectively.
