Easing geopolitical tensions, corporate earnings and stronger macroeconomic indicators support weekly market rally.
KARACHI: The Pakistan Stock Exchange (PSX) recorded a strong performance during the week, with the benchmark KSE-100 Index gaining 5,336 points, or 3.03% week-on-week (WoW), to close at 181,430 points, as easing geopolitical tensions and the start of the corporate earnings season improved investor sentiment.
According to the weekly market review, banking stocks emerged as the largest contributors to the index’s performance, adding 1,716 points. The Cement sector contributed 705 points, followed by Fertilizer with 650 points, Exploration and Production (E&Ps) with 547 points and Power with 331 points.
The broader macroeconomic environment also provided support to market sentiment during the week. Pakistan’s Consumer Price Index (CPI) inflation eased to 9.2% year-on-year in July 2026, compared with 11.1% in June.
Meanwhile, Pakistan recorded a trade deficit of $3.9 billion in July 2026. Exports rose 9.5% YoY and 31.1% MoM to $2.9 billion, while imports increased 18% YoY to $6.9 billion.
The government also raised Rs939.1 billion through a Treasury Bill auction on August 4, significantly exceeding its target of Rs400 billion. Cut-off yields declined across most tenors, while Rs325.3 billion was allocated to six-month T-Bills.
Pakistan’s petroleum sector also showed signs of recovery. Petroleum sales increased 23% YoY to 1.51 million tons in July. Excluding furnace oil, oil marketing company volumes rose 18.5%, supported by lower fuel prices, improved farm economics and recovering automobile demand.
The country’s refining and construction sectors also recorded growth. Refinery upliftment increased 47.7% YoY, while total production rose 8.2% to 962,000 tons. Cement dispatches increased 6% to 4.48 million tons, with North-based dispatches rising 10%.
Pakistan’s external position remained relatively stable, with foreign exchange reserves reaching approximately $22.5 billion as of August 5, including around $17 billion held by the State Bank of Pakistan (SBP) and $5.4 billion maintained by commercial banks.
The rupee also strengthened during the week, appreciating 0.2% against the US dollar to close at around Rs277.7.
Despite the strong index performance, overall trading activity remained mixed. Average daily volumes declined 9.9% WoW to 749.3 million shares, while average traded value increased 7% to approximately $121.9 million.
Looking ahead, analysts expect geopolitical developments and corporate earnings to remain key drivers of investor sentiment. The KSE-100 is currently trading at a price-to-earnings (P/E) ratio of 8.2 times, while offering a dividend yield of approximately 6.1%.
The combination of improving inflation, stronger petroleum and cement activity, stable foreign exchange reserves and easing geopolitical concerns could continue to support investor confidence, although external risks and global commodity price movements remain important factors for the market’s near-term direction.