KSE-100 Index outlook hinges on US–Iran deal: report

The benchmark KSE-100 Index of the Pakistan Stock Exchange (PSX) is expected to remain driven by developments in US–Iran talks, with near-term market direction hinging on the outcome of these discussions and the release of March quarter results, according to brokerage houses.

According to a weekly market update by Arif Habib Limited, the KSE-100 Index witnessed a strong turnaround during the week, with the market gaining momentum and rallying. The upswing was supported by continued positive sentiment from the earlier temporary ceasefire between US and Iran, alongside expectations of progress in talks and the announcement of a 10-day ceasefire in Lebanon, sustaining optimism around a potential recovery.

Overall, the index closed at 173,939 points on Friday, up 6,748  points or 4.0% WoW. 

On the external front, Pakistan posted a current account surplus of $1.07 billion in March 2026, compared to $231 million in February 2026, taking the cumulative balance for 9MFY26 to a surplus of $8 million.

Pakistan’s large-scale manufacturing output grew by 6.5% year-on-year in February 2026, while declining 9.0% month-on-month. On a cumulative basis, LSMI increased by 5.9% during 8MFY26.

Banking sector deposits rose 18.6% year-on-year to Rs37.5 trillion in March 2026, while advances increased by 8.1% and investments surged 20.8% over the same period.

Power generation remained strong, with output rising 6% year-on-year to 8,939 GWh in March 2026, supported by higher contributions from hydel, coal, furnace oil, gas and wind. Generation cost declined 15% year-on-year to Rs8.08 per kWh due to a favourable energy mix, keeping the fuel cost adjustment at Rs0.27 per kWh.

Auto sales increased 40% year-on-year to 15,500 units in March 2026, while declining 9% month-on-month. Cumulatively, sales rose 43% year-on-year to 144,000 units during 9MFY26.

Technology exports increased 20% year-on-year and 13% month-on-month to $413 million in March 2026, contributing 46% to total services exports.

OGDCL announced the country’s largest oil and gas discovery at the Baragzai X-01 well in Nashpa Block, with recent production of 5,300 barrels per day of oil, 17 million cubic feet per day of gas and 15 metric tonnes per day of LPG, taking cumulative output to around 15,000 barrels per day and 45 million cubic feet per day.

In April 2026, Fitch affirmed Pakistan’s sovereign credit rating at ‘B-’ with a stable outlook.

As of April 10, State Bank of Pakistan reserves declined by $1.3 billion week-on-week, mainly due to a Eurobond payment, to $15.08 billion.

The rupee remained stable against the US dollar, appreciating slightly by 0.03% week-on-week to 278.92 from 279.01.

Sector-wise contribution
Positive contributions came from banks with 2,725 points, E&Ps with 964 points, power with 613 points, cement with 509 points and auto assemblers with 448 points. Negative contributions were recorded from refinery with 2.48 points and tobacco with 2.39 points.

Scrip-wise contribution
On the scrip side, major positive contributors included UBL with 1,404 points, NBP with 556 points, OGDC with 551 points, HUBC with 547 points and PPL with 322 points. Negative contributions came from MEBL with 59 points, PTC with 17 points, ATRL with 12 points, PSEL with 5 points and PAKT with 2 points.

Volume and value
Average daily volumes stood at 1,037 million shares, up 35.7% week-on-week, while the average traded value increased 17.1% week-on-week to $173.5 million.

Outlook

According to AHL, the KSE-100 Index is expected to remain driven by developments on the US–Iran talks. Near-term performance will depend on the outcome of these discussions alongside the release of the March quarter results. The KSE-100 Index is currently trading at a P/E of 8.5x, offering a dividend yield of ~6.0%.

AKD Research also identified potential negotiations in Islamabad over the US–Iran conflict as a key driver of investor sentiment, noting that any positive developments could support further market recovery.

“Upcoming negotiations in Islamabad on US-Iran conflict would remain a key focus for investors, with any positive developments likely to drive further market recovery, particularly given the improved diplomatic positioning of Pakistan,” the brokerage firm said in its weekly outlook report.