The market remained volatile throughout the week amid persistent military conflict in the Middle East, driving volatility in international oil prices. The benchmark index declined by 1,126pts or 0.7% during the week to close at 152,740pts on Thursday. Consequently, market participation moderated during the week, with avg. Daily traded volumes declined to 418mn shares, compared to 548mn shares in the prior week. Meanwhile, developments on the economic front remained encouraging, as the country posted Current Account surplus of US$427mn in Feb’26, against a deficit of US$85mn in SPLY, primarily driven by higher workers remittances. Industrial activity (LSMI) expanded by 10.5%YoY in Jan’26, led by growth in the automobile and textile sectors. Furthermore, power generation increased by 11%YoY in Feb’26, supported by lower tariffs and a shift of industrial consumers towards national grid. However, urea offtakes declined by 28%YoY during Feb’26 due to elevated channel inventory following advance procurement in Dec’25, while DAP offtakes rose 2.5x YoY over the same period. Meanwhile, T-bill yields rose by 51-100bps, in the first auction following SBP’s status quo in MPC meeting.

Outlook

Going forward, market sentiment will hinge on developments in 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 6.6x. 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/639095368749664570.pdf

 Courtesy – AKD Research