The KSE-100 Index gained 3% week-on-week, rising 5,336 points to close at 181,430, as easing geopolitical tensions, falling oil prices and strong corporate earnings boosted investor confidence.
According to brokerage reports, the market ended a three-week losing streak amid growing expectations of a potential US-Iran deal and improving economic indicators.
Oil prices also supported sentiment, with Arab Light crude falling around 15% WoW to $76.1 per barrel as Iran-Oman talks raised hopes of restoring the Strait of Hormuz to normal operations.
Banks remained the strongest-performing sector, contributing around 1,919 points to the index, supported by strong second-quarter earnings from major banks including Habib Bank, Meezan Bank and MCB Bank. Cement, fertilizer, exploration and production, and power stocks also contributed significantly to the market’s gains.
Pakistan’s inflation rate eased to 9.2% in July 2026 from 11.1% in June, marking the fourth consecutive month of single-digit inflation. Meanwhile, the country’s trade deficit stood at $3.9 billion during July, while exports increased 31.1% month-on-month to $2.9 billion.
Foreign exchange reserves held by the State Bank of Pakistan rose to $17 billion by July 31, while total liquid reserves reached $22.5 billion. The rupee also strengthened slightly, closing at around Rs277.7 against the US dollar.
Industrial activity showed signs of recovery, with petroleum product offtakes rising 23% year-on-year to around 1.5 million tons in July. Cement dispatches also increased 6% to around 4.5 million tons.
Despite the strong index performance, trading volumes remained relatively subdued. AKD Securities reported average daily volume declining 29% WoW to 934 million shares, while Intermarket Securities recorded a 9.9% decline to 749 million shares.
Looking ahead, AKD Securities expects the market to benefit from improving economic indicators, easing geopolitical tensions and positive corporate earnings. The brokerage said a potential US-Iran agreement could push international oil prices closer to pre-conflict levels and provide further support to investor sentiment.
AKD Securities also noted that the market remains attractively valued, with the KSE-100 trading at a forward price-to-earnings ratio of around 8.0x. It has set a target of 263,800 points for the index by December 2026.
Arif Habib Limited expects geopolitical developments and the ongoing corporate earnings season to remain key drivers, while Intermarket Securities highlighted Middle East developments, earnings and domestic political conditions as major factors for market direction in the coming weeks.
