The KSE-100 Index remained mostly range-bound throughout the week, closing slightly higher at 185,099 points. This represents a gain of 689 points, or 0.4% week-over-week. Market sentiment remained generally subdued for most of the week amid escalating geopolitical uncertainties, keeping investors cautious. However, a late Friday rally was driven by fresh liquidity, easing geopolitical tensions, and growing expectations of a potential policy rate cut in the upcoming monetary policy statement (MPS).
The government raised PKR 488 billion through a Pakistan Investment Bond (PIB) auction, surpassing the target of PKR 450 billion. Cut-off yields declined by 59 to 70 basis points across all tenors.
Auto sales, including cars, light commercial vehicles (LCVs), and vans & jeeps, declined by 14% month-over-month, totalling 13,300 units in December 2025. However, on a year-over-year basis, sales increased by 35%. Cumulatively, in the first half of the fiscal year 2026, auto sales rose by 46% year-over-year to 88,000 units.
Oil production increased by 1.1% week-over-week, reaching 65,444 barrels of oil per day (bopd), led by higher output from northern fields amid reduced curtailment. Gas production rose to 3,012 million cubic feet per day (mmcfd), the highest level since mid-March 2025, driven by increased supply to the fertilizer and power sectors alongside reduced curtailments in the north.
The prices of motor spirit (MS) and high-speed diesel (HSD) remained steady at PKR 253.17 per litre and PKR 257.08 per litre, respectively.
State Bank of Pakistan (SBP) held reserves increased by USD 16.1 million to reach USD 16.1 billion during the week. The Pakistani rupee appreciated slightly against the US dollar, strengthening by 0.03% week-over-week to close at PKR 279.95/USD.
**Outlook and Recommendation**
We expect the KSE-100 Index to remain positive in the coming week, supported by the approaching monetary policy decision and expectations of a rate cut. Additionally, the upcoming earnings season may provide further upside, particularly with the potential for positive earnings surprises.
The KSE-100 Index is trading at a price-to-earnings ratio (PER) of 9.2x, yielding approximately 5.4%.
Our top picks include MEBL, NBP, FFC, OGDC, PPL, FCCL, KOHC, NPL, NCPL, SYS, AIRLINK, PSO, SAZEW, INDU, and PAEL.
*Courtesy of AHL Research*
