Geopolitical developments likely to keep PSX trading cautious in near term: report

The KSE-100 Index of the Pakistan Stock Exchange is expected to remain supported in the near term by compliance with the US-Iran peace deal, progress in technical talks between the two countries and favourable June 2026 corporate results, according to separate notes by AKD Research and Arif Habib Limited.

However, geopolitical developments between the US and Iran are likely to keep trading cautious.

The market posted positive momentum during the week, supported by a possible US-Iran deal that pushed oil prices below $80 per barrel, their lowest level in three months.

Sentiment was also helped by a favourable budget for several sectors, including cement, steel, refineries, textile, pharmaceuticals and technology, along with the reduction or elimination of super tax for individuals and corporates.

The State Bank of Pakistan’s decision to keep the policy rate unchanged in its Monetary Policy Committee meeting on Tuesday further supported the market.

However, the postponement of technical talks between the US and Iran in the early hours of Friday slightly weakened sentiment on the final trading day.

The benchmark KSE-100 Index gained 6,523 points, or 4% week-on-week, to close at 178,923 points.

Market participation also improved, with average daily traded volume rising 53% week-on-week to 1.4 billion shares, compared with 900 million shares in the previous week.

Sector-wise, banks made the largest positive contribution, adding 2,047 points to the index, followed by cement with 732 points, investment banks 663 points, exploration and production companies 634 points and power 416 points.

Negative sector-wise contributions came from property with 53 points, automobile parts 7 points, sugar 1 point, woollen 0.4 points and synthetic and rayon 0.01 points.

Scrip-wise, UBL led the positive contribution with 1,018 points, followed by ENGROH with 529 points, HUBC 399 points, PPL 377 points and OGDC 300 points.

Negative contributors included JVDC with 53 points, TRG 38 points, MARI 28 points, POL 16 points and HMB 11 points.

Average traded volume stood at 1.147 billion shares, up 47.8% week-on-week, while average traded value rose 118% week-on-week to $226 million.

On the macroeconomic front, the current account posted a surplus of $459 million in May 2026, compared with a deficit of $44 million in the same period last year.

IT exports increased 13% year-on-year to $373 million during the month.

Yields in the first Pakistan Investment Bond auction after the recent Monetary Policy Committee meeting declined by 34 to 116 basis points.

The yields stood at 12.14%, 12.09%, 12.19% and 12.61% for the two-, three-, five- and 10-year tenors, respectively.

Gas production fell 2.2% week-on-week to 2,955 mmcfd in the second week of June 2026 due to lower output from Mari, Uch and Kandhkot.

This was partially offset by a recovery in Shewa, where production rose to 101 mmcfd from 23 mmcfd after SNGPL pipeline disruptions normalised.

Oil production declined 3.1% week-on-week to 66,707 bopd due to weaker output from Adhi, Maramzai, KPD, Mamikhel South and Sharf.

Liquid foreign exchange reserves increased by $70 million to $22.7 billion as of June 18, 2026.

SBP reserves rose by $5.8 million to $17.2 billion, while commercial bank reserves increased by $64.2 million to $5.5 billion. The reserves provided 2.71 months of import cover.

The Pakistani rupee appreciated 0.02% week-on-week against the US dollar to close at Rs278.25 per dollar.

On the sectoral front, the Large-Scale Manufacturing index rose 6.4% year-on-year in 10MFY26.

In the fertiliser sector, urea offtake remained flat year-on-year at 419,000 tonnes in May 2026, while DAP sales fell 36% year-on-year due to higher prices.

AKD Research said compliance with the peace deal, positive outcomes from US-Iran technical talks and favourable June 2026 financial results would support market sentiment in the near term.

Arif Habib Limited said the KSE-100 was likely to trade cautiously in the coming week as Muharram public holidays shorten the trading week, while geopolitical developments surrounding the US-Iran conflict remain the key factor to monitor.