The Pakistan Stock Exchange (PSX) is expected to remain sensitive to geopolitical developments in the coming weeks, while the ongoing corporate earnings season could provide some support to market performance, according to a weekly review by Arif Habib Limited (AHL).
The benchmark KSE-100 Index closed the week at 177,167 points, falling 2,938 points or 1.63% week-on-week amid continued uncertainty surrounding the US-Iran conflict and domestic political developments.
The market outlook remains closely linked to geopolitical developments, with investors likely to monitor regional tensions and their potential impact on Pakistan’s economy and financial markets.
Pakistan’s current account deficit narrowed sharply to $328 million in July 2026, down 38% year-on-year from $529 million in July 2025 and 59.7% month-on-month from $814 million in June.
However, large-scale manufacturing output declined 3.5% year-on-year in June 2026 and fell 6.1% month-on-month. Despite the monthly decline, LSM output increased 5% year-on-year during FY26.
Foreign direct investment also improved, with net FDI inflows reaching $179 million in July, up 265% from $49 million in June.
Technology exports increased 18% year-on-year to $417 million, accounting for 45% of total services exports.
Auto financing rose 35.2% year-on-year to Rs. 386 billion in July, compared with Rs. 286 billion a year earlier.
Power generation increased 7% year-on-year to 15,122 GWh in July, marking the second-highest July generation on record.
Banks were the largest negative contributor to the KSE-100 Index during the week, accounting for a decline of 1,773 points. Fertiliser companies contributed a further 449-point decline, followed by cement at 410 points, investment banks at 243 points and power companies at 236 points.
Among individual stocks, UBL was the largest negative contributor, followed by HBL, FFC, HUBC and ENGROH.
Meanwhile, exploration and production companies provided the strongest positive contribution, adding 372 points. OMCs contributed 222 points, followed by refineries with 151 points.
PPL, PSO, OGDC, ATRL and SRVI were among the leading positive contributors.
Average daily trading volume stood at 845.71 million shares, down 0.9% week-on-week, while average traded value increased 7.6% to $148 million.
In the debt market, the government raised Rs. 517.9 billion through a T-Bill auction against a target of Rs. 500 billion. The largest portion, Rs. 349.5 billion, was raised through three-month T-Bills.
The Pakistani rupee strengthened slightly against the US dollar, appreciating 0.03% week-on-week to close at Rs. 277.56 per dollar.
The KSE-100 Index is currently trading at a price-to-earnings ratio of 8.1, while offering a dividend yield of 6.3%.
According to the AHL review, geopolitical developments will remain a key factor for the PSX outlook, while corporate earnings could provide investors with some support amid ongoing market uncertainty.
