KARACHI: The market is likely to maintain its positive momentum in the coming week, underpinned by the successful staff-level agreement on the IMF’s second review, minimal flood damage concerns and improved sovereign credit outlooks from global rating agencies.
According to AKD Research, valuations remain attractive, with the KSE-100 index trading at a price-to-earnings multiple of 7.4x and offering a dividend yield of 6.6 per cent, while falling fixed income yields and limited alternative investment avenues are expected to support continued interest in equities.
Confidence may also strengthen on expectations of foreign portfolio and direct investment flows, driven by improving economic ties with the US and Saudi Arabia. However, investors will remain attentive to macro data releases, policy developments ahead of the IMF board meeting, and corporate results to gauge the sustainability of this sentiment.
The benchmark KSE-100 index closed the week at 159,593 points, down 1.3 per cent on a week-on-week (WoW) basis after shedding 2,038 points, although the market staged a partial recovery with a 496-point rebound during Friday’s session.
Average daily traded volumes fell by 30 per cent WoW to 1,093 million shares, reflecting cautious trading amid mixed macro signals.
On the external front, the trade deficit widened by 56 per cent year-on-year in October to $3.2 billion, though it improved by 4.0 per cent month-on-month (MoM), while the National CPI stood at 6.2 per cent year-on-year (YoY) in October, weighing on sentiment mid-week.
Positive triggers emerged later, including stronger remittance inflows at $3.4 billion, rising 12 per cent YoY and 7.0 per cent MoM, and a record fiscal surplus of Rs2.1 trillion (1.6 per cent of GDP) in 1QFY26. The latest PIB auction saw the State Bank of Pakistan (SBP) raise Rs489 billion against the target of Rs400 billion, with yields remaining broadly stable between 11.33 per cent and 12.34 per cent for two- to 15-year tenors.
Meanwhile, foreign exchange reserves increased by $31 million to $14.5 billion, and the rupee gained 0.03 per cent to close at 280.82 per US dollar.
Syed Danyal Hussain at JS Research noted that market activity remained subdued primarily due to regional geopolitical risks. He highlighted that October inflation at 6.2 per cent pushed 4MFY26 average inflation to 4.73 per cent as supply chains faced pressure from border disruptions.
He also pointed out that the trade deficit for 4MFY26 reached $12.6 billion, driven by higher imports at $6.1 billion and a 4 per cent decline in exports. Additionally, he cited rising circular debt in the power sector, which grew by Rs79 billion during 1QFY26 to Rs1.69 trillion, alongside a revenue shortfall of Rs76 billion for the FBR in October.
Nabeel Haroon at Topline Securities attributed the weekly market decline to net selling by foreign corporates and mutual funds, with average daily traded value standing at Rs36 billion and volumes at 887 million shares. Sector-wise, Jute, Miscellaneous, and Refinery outperformed, gaining 19.9 per cent, 6.1 per cent, and 5.8 per cent WoW, respectively, while Leasing, Synthetic & Rayon, and Textile Composite declined by 15.2 per cent, 4.6 per cent and 3.6 per cent.
Overall, while short-term volatility may persist, improving economic indicators and foreign engagement prospects continue to provide underlying support to market sentiment.