Market volatility persisted this week, mainly shaped by Middle-East conflict and resulting fluctuations in int’l oil prices. Benchmark index declined by 1,033pts or 0.68%WoW to close at 151,708pts on Friday. Week began on a positive note, supported by emerging de-escalation efforts with Pakistan acting as a mediator; however, gains were eroded in last two trading sessions as conflicting statements from the U.S. and Iran heightened uncertainty.
On the domestic macro front, cut-off yields in Thursday’s PIB auction increased by 90-225bps, with 5-yr paper yield rising to 12.5%. Moreover, Barrick Mining Corp extended the review period of Reko Diq by 12 months in light of the ongoing Middle East conflict and the escalation of domestic security issues. The aforesaid developments weighed on the Bank and E&P sectors, with both dragging the index by 805pts and 496pts during the week, respectively. Meanwhile, on the positive side, the IMF shared the MEFP draft with Pakistan, marking progress towards SLA for the third review. Additionally, amid the ongoing energy situation, GoP reduced the PSDP allocation by PkR100bn to accommodate fuel subsidies, as the government maintained domestic petroleum prices in the last two reviews, with an estimated two-week cost of PkR69bn.
However, market participation rebounded post-Ramadan, with avg. Daily traded volumes surging 2.1x WoW to 872mn sh from 418mn sh in the prior week. SBP held FX reserves, which increased by US$22mn WoW to US$16.4bn as of Mar 18, 2026. Other major news flows during the week included, 1) Pakistan secures petroleum cargoes till Apr’25, 2) Foreign assistance inflows up 18.35%YoY to US$5.862bn during 8MFY26, 3) NEPRA okays competitive bidding for power supply, and 4) Domestic cotton prices jump sharply amid ME crisis. Sector-wise, on the main board, Technology, Inv. Banks and cements were amongst the top performers, up 3.1%/1.2%/0.9%WoW. On the other hand, Refinery, Power, and E&P reported declines of 3.9%/2.9%/2.8 % WoW, respectively. Flow-wise, major net selling was recorded by Insurance and banks with a net sell of US$12.5mn and US$6.8mn, respectively. On the other hand, Individuals absorbed most of the selling with a net buy of US$20.0mn. Company-wise, top performers during the week were, i) SYS (up 11.0%WoW), ii) PGLC (up 9.6%WoW), iii) INIL (up 7.0%WoW), iv) BNWM (up 6.4%WoW), and v) PIBTL (up 5.0%WoW), while top laggards were, i) KTML (down 11.2%WoW), ii) SSGC (down 9.6%WoW), iii) KEL (down 9.1% WoW), iv) SAZEW (down 8.9%WoW), and v) GAL (down 8.1%WoW).
Outlook
Going forward, market sentiment will hinge on developments of the Middle East conflict. At the same time, investor focus will remain on the government’s energy conservation measures, diversification of fuel imports, and progress on the IMF review. Over the medium term, any de-escalation in the conflict could spark a strong market rebound, as recent corrections have made valuations more attractive, with forward P/E now at 6.4x. We forecast the KSE-100 Index to reach 263,800 by Dec’26. Our top picks include OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP and SYS.
Full Report
https://research.akdsl.com/639102374478617072.pdf
Courtesy – AKD Research
