PSX ends lower amid lingering ME uncertainty

KSE-100 index slips 0.73%; geopolitical caution outweighs strong remittances, fiscal data

KARACHI:

The KSE-100 index of the Pakistan Stock Exchange (PSX) closed the week at 180,104, down 1,325 points, or 0.73%, as continued uncertainty about the cessation of hostilities between the United States and Iran weighed on investor sentiment.

On a day-on-day basis, the PSX commenced the trading week with a range-bound session on Monday. The KSE-100 closed on a flattish note, down 120 points (-0.07%) at 181,310. PSX kept the negative trend intact on Tuesday, declining 1,461 points (-0.81%) to close at 179,847.

However, bulls made a strong comeback in Wednesday's session after two consecutive days of profit-taking. The index hit the intra-day high of 1,054 points before settling at 180,311, up 464 points (+0.26%). On Thursday, the bourse closed in the red as the KSE-100 shed 207 points (-0.11%) to settle at 180,105.

Arif Habib Limited (AHL), in its weekly commentary, noted that the KSE-100 index closed down by 0.73% week-on-week (-1,325 points), primarily impacted by continued uncertainty regarding cessation of hostilities between the US and Iran.

Among key economic data, remittances for July increased by 13% year-on-year and 5% month-on-month to reach $3.6 billion compared to $3.2 billion in July 2025. Gross inflows into the Roshan Digital Account reached $13,647 million as of July 2026, out of which $2,118 million was repatriated and $8,603 million was utilised locally.

Automobile sales for July surged by 80% YoY and declined 13% MoM to 19.8k units. The central government debt increased by 7.4% YoY to Rs83.4 trillion as of June 2026 compared to Rs77.9 trillion in June 2025.

Hydrocarbon production data indicated a decline of 3.4% WoW for oil output, which clocked in at 68.2k barrels per day, mainly due to lower flows from Nashpa. Meanwhile, gas production increased 4% WoW to 2,939 million cubic feet per day, driven by a revival in Uch gas flows.

Motor spirit prices decreased by Rs2.64 to Rs324.98/litre due to changes in ex-refinery prices based on weekly averages, as per the daily pricing formula, while the petroleum development levy and the inland freight equalisation margin remained unchanged. For high-speed diesel, the price went up by Rs3 over the week to Rs382.79/litre, comprising an increase of Rs3 in the levy.

Pakistan's budget deficit came in at Rs3,313 billion, the lowest after FY18 (2.6% of GDP, the lowest in history). Tax revenue stood at Rs13,010 billion (+11% YoY), while total mark-up payments for FY26 hit Rs6,948 billion (-22% YoY). Meanwhile, the rupee appreciated slightly against the US dollar, strengthening 0.04% WoW to close at Rs277.7/$.

Going forward, AHL expects the market direction to be influenced by geopolitical developments, while corporate results, with earnings season underway, are likely to be a key driver of investor sentiment.

The KSE-100 is currently trading at a price-to-earnings (P/E) ratio of 8.1x, offering a dividend yield of 6.2%. "Our top picks include OGDC, Pakistan Petroleum, Fauji Fertiliser, Lucky Cement, Maple Leaf Cement, NBP, Hubco, PSO, DG Khan Cement, Sazgar Engineering and Attock Refinery."

Sectors that contributed negatively were power (-445 points), technology (-236 points), cement (-234 points), investment banks (-172 points) and insurance (-59 points). Positive contributors were exploration and production (+297 points), refinery (+159 points), leather and tanneries (+76 points) and fertiliser (+17 points).

Stock-wise, the negative contribution came from Hubco (-435 points), Lucky Cement (-188 points), Engro Holdings (-173 points), Systems Ltd (-159 points) and UBL (-122 points). Positive contribution came from HBL (+280 points), PPL (+214 points), Pakistan Oilfields (+127 points), Cnergyico (+84 points) and Service Industries (+76 points).

Ahmed Sheraz of KASB KTrade said that the market was likely to remain range bound next week as investors awaited a fresh catalyst. Oil prices continue to hover around $87-90/barrel, keeping sentiment cautious, while the absence of a clear positive trigger is limiting the aggressive buying interest.