The market staged a strong rebound during the week following the ceasefire agreement between Iran and Israel, with the KSE100 index gaining 4,356 points or 3.6% week-over-week to close at a record 124,379 points on Friday. While the week began on a cautious note due to renewed concerns over regional instability following the US strike on Iranian nuclear facilities, the ceasefire restored investor confidence and triggered a sharp recovery from the second trading day onward. Meanwhile, market participation dropped despite the rally, with the average Daily traded volume falling to 736 million sh from 822 million sh in the previous week, down 10% week-over-week. On the macro front, SBP-held reserves declined sharply by US$2.7 billion week-over-week (WoW) to US$9.1 billion as of June 20, 2025, marking the second-largest weekly fall, primarily due to scheduled external debt repayments. However, SBP reiterated its June-end reserve target of US$14 billion, with US$3.6 billion in inflows expected to be reflected in the numbers for the coming week. Meanwhile, the FY26 federal budget was approved on Thursday, with minor adjustments to tax laws and rates. On the inflation front, the headline CPI for FY26 is projected to moderate further to 4.4% year-over-year (YoY), compared to 4.5% for FY25E, due to a moderate increase in the food and housing indices.
Domestic currency remained largely flat WoW at PkR283.7/US$. Other major news flow during the week included, 1) Pakistan, US eyeing preferential trade deal in talks, 2) Consumer confidence at highest since 2022, up 25%YoY in 4QCY25, 3) Power generation up 1%YoY in May ’25 on lower tariffs, and 4) RDA inflows up 14%MoM in May ’25, reach US$10.38bn. Sector-wise, the Woollen, glass and ceramics, and vanaspati and allied industries were amongst the top performers, up 40.9%/13.3%/10.7 % week-over-week. On the other hand, Modaraba, ETFs, and Sugar & Allied Industries reported a decline of 14.1%, 4.5%, and 1.1% week-over-week (WoW), respectively. Flow-wise, barring debt, major net selling was recorded by Foreigners and Individuals, with net sales of US$11.8 million and US$4.0 million, respectively. On the other hand, Mutual funds and Insurance absorbed most of the selling, with net buys of US$9.9 million and US$6.2 million, respectively. Company-wise, top performers during the week were, i) BNWM (up 40.9%WoW), ii) GHGL (up 20.2%WoW), iii) NATF (up 19.5%WoW), iv) HUMNL (up 15.8%WoW), and v) PABC (up 14.1%WoW), while top laggards were, i) PSEL (down 17.3%WoW), ii) PKGP (down 11.1%WoW), iii) PGLC (down 2.5%WoW), iv) EPCL (down 1.8%WoW), and v) ISL (down 1.7%WoW).
Outlook
The market is expected to remain positive in the coming weeks, with forward inflation for FY26 projected at 4.4% year-over-year (YoY), indicating substantial room for monetary easing, which would catalyse securities. The KSE100 is anticipated to sustain its upward trajectory, with a target of 165,215 points by Dec ’25, primarily driven by strong earnings in fertilisers, sustained ROEs in banks, and improving cash flows of E&Ps and OMCs, benefiting from falling interest rates and economic stability. Our top picks include OGDC, PPL, PSO, FFC, ENGROH, MEBL, MCB, HBL, FCCL, INDU, and SYS.
Courtesy- AKD Research
