The market witnessed bullish momentum during the outgoing week, with the benchmark KSE-100 Index gaining 8,122pts or 5.0% WoW to close at 171,116pts on Friday, while ADTV declined by 9.7% WoW to 1.1bn shares. The dominant sentiment driver was easing of Iran-US tensions, with both sides reportedly edging toward a short-term memorandum to halt the conflict, leading int’l oil prices to ease by 18%WoW upto 100.5.

Earlier in the week, U.S. President Trump paused the ‘Project Freedom’ naval operation in the Strait of Hormuz after one day, following a request from Pakistan and other mediating countries, citing progress toward a final agreement with Tehran.

Despite an intermittent exchange of fire between U.S. and Iranian forces near the Strait mid-week, Trump confirmed the ceasefire remained in effect. Furthermore, the IMF Executive Board meeting today will consider approval of the US$1.2bn tranche under the EFF and RSF programs.

FX reserves are expected to reach US$17bn by end-Jun’26, as per SBP Governor.

On the macroeconomic front, Pakistan’s trade deficit increased by 4% YoY to US$4.1bn in Apr’26, taking the 10MFY26 trade deficit to US$32.0bn (up 20% YoY). Cement dispatches rose 11%YoY to 3.9mn tons in Apr’26, led by 20%YoY growth in local dispatches. Furthermore, LSM index rose 11.1%YoY in Mar’26, taking 9MFY26 growth to 6.5%YoY. SBP held FX reserves increased by US$23mn WoW to US$15.85bn as of April 30.

Outlook

Going forward, the IMF Executive Board’s approval of US$1.2bn tranche alongside the trajectory of Iran-US negotiations would remain the pivotal near-term catalysts for market direction, with continued softening of oil prices to act as a supportive trigger.

Moreover, the market continues to trade at attractive valuations, with a current P/E of 7.5. By Dec’26, we forecast the KSE-100 Index to reach 263,800.

Our top picks include OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP and SYS.

Full Report
https://research.akdsl.com/639138666116333336.pdf

Courtesy – AKD Research