Pakistan stock market likely to continue upward momentum next week

There is likely to be some profit-taking and adjustments at the Pakistan Stock Exchange in the coming week, according to analysts that spoke to Nukta. However, expectations of good corporate results and low inflation figures boosting chances of an interest rate cut might keep investors on the hunt for blue chip stocks.

Despite some profit-taking this week, the market maintained its upward momentum, with the index climbing from 134,299 to 138,597 points. This translated into a strong weekly gain of 4,298 points or 3.2% .

The rally was fueled by broad-based buying across sectors, supported by stabilizing macroeconomic indicators.

Sentiments remained positive during the week as the International Monetary Fund (IMF) expressed satisfaction with Pakistan's economic progress and structural reform efforts.

Pakistan recorded a current account surplus of $328 million in June, bringing the FY25 cumulative surplus to $2.1 billion. It was the first surplus in 14 years.

This improvement was largely driven by remittances, which rose 27% to $38.3 billion in FY25. However, this upward trend may face pressure in the current fiscal year amid growing controversy over banks profiting excessively from the certificate-based (CERT) remittance transactions.

No subsidy has been allocated for the current fiscal year, compared to PKR 85 billion set aside previously. Last year, due to a surge in remittance inflows, banks submitted subsidy claims totaling PKR 200 billion, raising red flags over the scale of profit-taking and prompting scrutiny.

Pakistan faces over $23 billion in external debt repayments this fiscal year, with some expected to be rolled over by friendly countries. Nonetheless, this may create pressure on the rupee.

Optimistic sentiment

An analyst from Arif Habib Ltd. said that riding on improving macro fundamentals, the market continues to build on its upward momentum keeping investor sentiment buoyant.

While bouts of profit-taking may persist, the overall tone remains optimistic. With the earnings season now underway, all eyes will be on corporate results for fresh direction.

The KSE-100 index is currently trading at a forward PER of 7.1x (2026) against its 10-year average of 8.0x, offering a compelling dividend yield of ~7.4% versus the historical average of ~6.5%.

An analyst from AKD Securities said that the market is likely to maintain a positive trend in the coming weeks, driven by expectations of strong corporate earnings acting as a key catalyst for equities.

The KSE-100 is anticipated to sustain its upward trajectory, with a target of 165,215 points by December, primarily driven by strong earnings in fertilizers, sustained ROEs in banks, and improving cash flows of E&Ps and OMCs, benefiting from falling interest rates and economic stability, he said.

An analyst from Spectrum Securities said that next week will be rollover week of July futures contracts and this may exert some selling pressure in heavy leveraged stocks earlier in the week, but the quantum of leverage is not huge enough to cause any major jitters.

There is anticipation of announcement in the coming days regarding the payment of amounts to power producing companies, PSO and SNGP, as the agreements have been finalized per market sources.

This may provide some relief to the energy chain listed companies, which have underperformed the market in the recent past, he said.