Market sentiment remained subdued during the week, due to the escalation of military conflict between the U.S./Israel and Iran, alongside tensions on the Pakistan–Afghanistan border. Consequently, the index declined by 10,566pts (↓6.3%WoW) during the week, closing at 157,496pts as of Friday’s close. Notably, Monday witnessed the second-largest single-day drop in the index’s history, plunging by 16,089pts (↓9.6%DoD). The sharp fall appeared to be an overreaction, followed by a partial recovery in the subsequent sessions.
Meanwhile, the Middle East conflict has resulted in the closure of the critical ‘Strait of Hormuz’, triggering a 16.3%WoW surge in the price of the Oil benchmark Arab Light to US$83.1/bbl. This development raises concerns over energy security, inflationary pressures, and the external account, weighing on overall market sentiment despite Pakistan’s ability to manage the situation. On the macro front, inflation rose to a 16-month high of 7% in Feb’26 amid heightened volatility. Market participation slowed during the week, with avg. Daily traded volumes decreased by 24%WoW to 791mn shares, compared to 1.0bn shares in the prior week. On the external front, trade deficit widened 5%YoY to US$3.0bn in Feb’26. On the sectoral side, cement offtakes rose 13% YoY in Feb’26.
Other major news flow during the week included, 1) Govt raises PkR555bn via T-bills sale; yields move up, 2) Pakistan refinery secures crude via Fujairah, Red Sea amid Hormuz closure, 3) SBP governor confident about 3.75-4.75% growth and 5-7% inflation, 4) OGDC strikes major oil, gas discovery in Kohat of 3.8k bpd/11.2mmcfd, respectively, and 5) SBP held FX Reserves rose US$87mn WoW to US$16.3bn as of Feb 27, 2026. Sector-wise, Refinery remained the sole top performer, up 0.5%WoW. On the other hand, Vanspati & Allied Industries, Property and Transport were amongst the worst performers, with declines of 18.8%/17.6%/16.3 % WoW, respectively. Flow-wise during the week, Mutual Funds and Foreigners recorded major net selling of US$56.0mn and US$22.1mn, respectively. On the other hand, Banks and Companies absorbed most of the selling, with net buys of US$34.5mn and US$15.0mn, respectively. Company-wise, top performers during the week were, 1) ATRL (up 4.8%WoW), 2) MARI (up 2.0%WoW), 3) KEL (up 2.0%WoW), 4) DHPL (up 1.7%WoW), and 5) HUMNL (up 1.1%WoW), while top laggards were, 1) JVDC (down 19.8%WoW), 2) KTML (down 19.5%WoW), 3) AKBL (down 18.1%WoW), 4) SSOM (down 17.2%WoW), and 5) PAEL (down 16.8%WoW)..
Outlook
Going forward, market sentiment is likely to be dictated by developments in the ongoing Middle East conflict. Meanwhile, the government’s ongoing efforts to address energy conservation, the ongoing IMF review, and SBP’s commentary in the upcoming MPC meeting on Monday would also remain key areas of investor focus. In the medium term, any de-escalation of military conflict in the Middle East could trigger a significant market recovery, as the recent correction has made market valuations much more appealing, with forward P/E now at 6.9x. 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/639084086888754603.pdf
Courtesy – AKD Research
