Pakistan stock market set for bullish trend amid US trade relief, circular debt hopes
Despite macro uncertainties, analysts expect the broader index to remain range-bound, with stock-picking focused on earnings and reforms likely to outperform
Haris Zamir
Business Editor
Experience of almost 33 years where started the journey of financial journalism from Business Recorder in 1992. From 2006 onwards attached with Television Media worked at Sun Tv, Dawn Tv, Geo Tv and Dunya Tv. During the period also worked as a stringer for Bloomberg for seven years and Dow Jones for five years. Also wrote articles for several highly acclaimed periodicals like the Newsline, Pakistan Gulf Economist and Money Matters (The News publications)
Pakistan’s stock market is expected to maintain an upbeat tone next week, buoyed by multiple catalysts — including a favorable trade development with the United States, optimism over circular debt resolution, and a flurry of corporate earnings announcements.
Ali Nawaz, CEO of Chase Securities, said the market remains event-driven, with investor focus locked on the government’s long-awaited plan to address circular debt in the power sector. “If implemented, this transaction could improve liquidity across the energy chain, benefiting key listed companies such as HUBC and PSO, while also signaling progress on the government’s reform agenda,” he said.
The ongoing results season is also likely to drive stock-specific action. Investors will keep an eye on earnings surprises and dividend payouts, particularly in index-heavy sectors such as banks, cement, and E&P. Strong results could spur short-term rallies, while disappointing numbers may trigger profit-taking in already-inflated stocks.
Despite macroeconomic uncertainties, analysts expect the broader index to stay range-bound, with selective stock-picking strategies — focused on earnings momentum and reform beneficiaries — likely to outperform.
The KSE-100 Index closed the week at 141,035 points, up 1,828 points or 1.3% from the previous week’s close of 139,207. The rupee also posted gains, supported by a crackdown on hundi and hawala operators. Since July 22, the PKR has appreciated by 0.8%, strengthening from 284.97 to 282.72 in the interbank market and from 288.50 to 285.30 in the open market.
An analyst from Arif Habib Ltd said next week’s market momentum will likely remain earnings-driven. “The KSE-100 is trading at a forward PER of 7.2x (2026), below its 10-year average of 8.0x, while offering a dividend yield of ~7.0%, higher than the historical average of ~6.5%,” the analyst noted.
Equity expert Jibran Sarfraz believes the market could set new highs in the coming week, thanks in part to the US decision to fix a tariff rate of 19% — lower than regional peers — which could help Pakistan’s exporters secure a stronger foothold. “If the government also introduces a competitive strategy that includes reduced electricity, gas, and interest rates, it could significantly boost the competitiveness of local products in global markets,” he said.
Another major trigger is the expected disbursement of funds stuck due to circular debt. “This could act as a catalyst for the market, which already breached the psychological 141,000-point mark last week,” Sarfraz added.
An AKD Securities analyst echoed the optimism, projecting further gains in the coming weeks driven by progress on circular debt and continued earnings momentum. The brokerage forecasts the KSE-100 to reach 165,215 points by December 2025, supported by robust earnings in fertilizers, strong ROEs in banks, and improved cash flows in E&Ps and OMCs, thanks to declining interest rates and growing economic stability.
Sector-wise, major positive contributions to the index this week came from:
- E&Ps: +1,222 points
- Technology: +423 points
- OMCs: +324 points
- Cement: +191 points
- Pharmaceuticals: +131 points
Negative contributions were seen in:
- Investment Banks: -285 points
- Fertilizer: -263 points
- Leather: -46 points
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