Stock market outlook brightens as KSE-100 builds momentum

KARACHI: The stock market is likely to enter the new week with a firm sense of optimism as analysts expect the recent momentum in the KSE-100 index to carry forward. AKD Research attributed this outlook to the IMF’s staff-level agreement on the second review, improved credit ratings from global agencies and declining fixed-income yields.

They added that investor confidence should strengthen further as prospects for foreign portfolio and direct investment brighten, supported by improving relations with the US and Saudi Arabia.

With limited alternative investment avenues and equities still trading at attractive valuations, AKD Research said the market offers compelling opportunities, noting that the KSE-100 trades at a price-to-earnings multiple of 7.6 times with a dividend yield of 6.8 per cent.

The index gained ground despite a tense start to the week. Early sessions were overshadowed by uncertainty after peace talks between Pakistan and Afghanistan ended without progress, followed by Kabul’s announcement that it would suspend trade with and through Pakistan.

The tone shifted once lawmakers approved the 27th amendment in both houses, which removed a cloud of political doubt and fuelled a sharp rally. This helped lift the benchmark by 3,751 points over the last two sessions and pushed the weekly close to 161,935 points, up 1.5 per cent or 2,342 points. According to data cited by AKD Research, trading activity softened, with average daily volumes slipping 13.6 per cent week-on-week (WoW) to 944 million shares compared with 1.1 billion shares earlier.

Macroeconomic readings provided a mixed but steady backdrop. Workers’ remittances reached 3.4 billion dollars in October, rising 12 per cent year-on-year (YoY), while inflows through Roshan Digital Accounts stood at $250 million, up 4.6 per cent month-on-month.

The State Bank’s foreign exchange reserves grew by $22 million over the week to $14.5 billion. The rupee edged up by 0.04 per cent to close at 280.7 against the dollar.

Key developments included the highest quarterly budget surplus on record at Rs2.1 trillion in the first quarter of FY26, the upcoming IMF board meeting on December 8 for the next $1.2 billion tranche and government approval of a letter of comfort for the Rs1.23 trillion circular debt resolution loan. Qatar’s willingness to divert 24 LNG cargoes next year and ongoing work on the country’s new industrial policy also shaped sentiment.

Sector performance remained uneven. Jute, woollen, fertiliser, textile composite and leather and tanneries led the gains, rising between 4.5 and 18 per cent WoW. Leasing companies, textile weaving, vanaspati and allied industries, power and tobacco lagged behind with losses of 2-8.3 per cent. Mutual funds and companies were the most active buyers, recording net purchases of $11.9 million and $2.2 million, while foreign investors sold a net $12.2 million.

Topline Securities analyst Nabeel Haroon said buying from mutual funds supported the index, which rose 1.26 per cent WoW. He noted that car sales reported by PAMA came in at 17,333 units in October, up 32 per cent YoY, while the T-bill auction raised Rs478 billion with yields steady.

Syed Danyal Hussain at JS Research said the market’s rise was modest but broad, helped by gains in cement, exploration and production and fertiliser. He highlighted ongoing geopolitical tensions, the government’s Rs2.1 trillion surplus, plans for Eurobond and Panda bond issuances and the revival of offshore exploration after 18 years.