KARACHI: The stock market outlook for the coming week remains upbeat, with optimism fuelled by the recently concluded trade deal between Pakistan and the United States, which includes cooperation on developing Pakistan’s untapped oil reserves.
According to a research report by AKD Securities Ltd, the KSE-100 index is expected to continue its upward trend in the coming weeks, driven by upcoming corporate earnings announcements and progress on resolving the circular debt issue.
AKD Securities has projected the KSE-100 to reach 165,215 points by December 2025, underpinned by strong profitability in the fertiliser sector, sustained return on equity in the banking space, and improved cash flows in exploration and production (E&P) and oil marketing companies (OMCs) -- all expected to benefit from a stable economic environment and declining interest rates.
The Pakistan Stock Exchange (PSX) ended the week on a strong note, with the benchmark KSE-100 closing at an all-time high of 141,035 points, registering a weekly gain of 1,828 points or 1.31 per cent. The index also touched a fresh intra-week high of 141,161 points. Positive momentum was largely attributed to the announcement of the US-Pakistan trade pact and clarity on the government’s plan to disburse Rs1.3 trillion secured from commercial banks, expected as early as next week.
These developments sparked robust buying interest in E&P and OMC sectors, which together contributed 1,546 points to the index -- 1,222 from E&Ps and 324 from OMCs. This late-week rally offset the early week’s sluggish performance, which was marred by uncertainty ahead of the Monetary Policy Committee (MPC) meeting.
Despite the bullish index performance, market participation was relatively weaker, with average daily traded volume falling by 11.6 per cent week-on-week (WoW) to 562 million shares. The traded value averaged Rs36 billion per day.
Syed Danyal Hussain, an analyst at JS Research, noted that after a muted start, the PSX rebounded sharply in the last two sessions. The oil-related rally was amplified by news of reduced tariffs on Pakistani exports to the US, cut to 19 per cent from the earlier 29 per cent announced in April, effective August 2025.
Meanwhile, the MPC maintained the policy rate at 11 per cent, against widespread expectations of a 50 to 100 basis point cut, due to inflationary concerns. Headline inflation rose to 4.1 per cent year-on-year in July, up from 3.2 per cent in June, driven by a fading base effect.
On the macro front, the government reported some positive fiscal performance, as the Federal Board of Revenue (FBR) exceeded its July 2025 revenue target by Rs7 billion, collecting Rs755 billion.
Meanwhile, the State Bank of Pakistan (SBP) reported a decline of $153 million in its foreign exchange reserves, which now stand at $14.3 billion as of July 25, 2025. The rupee appreciated for the second consecutive week, rising 0.26 per cent to close at Rs282.72 per US dollar, supported by continued action against the illicit currency market. However, the reversal of the Rs7.41 per unit electricity tariff relief announced earlier this year added to cost pressures.
Sector performance reflected investor confidence in specific industries. Jute stocks led the gains with a surge of 23.9 per cent week-on-week, followed by E&P at 8.1 per cent and OMCs at 5.1 per cent. In contrast, Vanaspati & Allied Industries, Woollen, and Property sectors saw declines of 14.3 per cent, 7.3 per cent and 6.0 per cent, respectively.
In terms of investor flows, foreign investors and banks were net sellers, offloading $4.5 million and $5 million, respectively. Mutual funds absorbed much of the selling pressure with a net buy of $10.9 million, providing support to the market during volatile sessions.
Nabeel Haroon, an analyst at Topline Securities, remarked that the market’s early-week range-bound movement was due to investors awaiting key corporate earnings. However, the strong close came as investor confidence was revived by the US trade deal and government liquidity announcements.
With strong macro drivers in play, focus in the coming week is expected to remain on corporate results and further developments related to the circular debt resolution, both of which could further drive investor sentiment and support fresh highs.