PSX rally to continue over economic easing, companies’ results

Pakistan’s stock market is expected to extend its positive momentum in the coming week, supported by expectations of further monetary easing, improving macroeconomic indicators and the start of the corporate earnings season, brokerage firms said.

Spectrum Securities said investor sentiment is likely to remain upbeat ahead of the State Bank of Pakistan’s Monetary Policy Committee meeting scheduled for January 26.

The firm expects a 50-basis-point cut in the policy rate, citing easing inflationary pressures and declining bond yields. Such a move could push the market toward fresh highs, it said.

An analyst from Arif Habib Ltd. echoed the optimistic outlook, saying the benchmark KSE-100 Index is expected to stay positive in the coming week, supported by expectations of a rate cut and the upcoming result season.

The brokerage noted that positive earnings surprises could provide additional upside. The KSE-100 is currently trading at a price-to-earnings ratio of 9.2 times, offering a dividend yield of about 5.4%.

An analyst at AKD Securities said positive momentum in the KSE-100 is likely to continue due to further monetary easing, an improving external account position and continued focus on economic reforms amid political stability.

The brokerage forecast the KSE-100 Index to reach 263,800 points by December 2026, adding that investor sentiment could strengthen further on expectations of foreign portfolio and direct investment inflows, driven by improving relations with the United States and Saudi Arabia.

The market remained volatile during the past week as geopolitical tensions initially weighed on sentiment. The KSE-100 Index declined by 2,953 points over four sessions following a U.S. announcement of a potential attack on Iran, which heightened global uncertainty. Sentiment later improved after the U.S. clarified it would not proceed with the attack, triggering a sharp rebound.

The index recovered 3,643 points in the final trading session, erasing the weekly losses, and closed the week with a net gain of 689 points at 185,099.

Analysts said demand for Pakistan’s defense equipment also supported the local currency, with the rupee appreciating by PKR 0.07 against the U.S. dollar, further boosting investor confidence.

Average daily volume on the KSE All Index fell 24% week-on-week to 979 million shares. Maple Leaf Cement (MDTL), Hascol Petroleum (HASCOL) and Fauji Fertilizer (FFL) led the volume charts with 45.5 million, 45.1 million and 45.0 million shares, respectively.

Market capitalization of the KSE All Index rose 1.04% from the previous week to $71.38 billion. Sector-wise, market capitalization increased most in transport, up 9.77%, followed by exploration and production, up 7.07%, and automobile assemblers, up 2.52%.

Foreign investors remained net sellers during the week, offloading shares worth $10.56 million. The heaviest selling was seen in banking stocks at $6.92 million, followed by technology at $3.04 million and cement at $2.64 million. Net foreign buying was recorded in the “other” category at $1.07 million.

On the local side, individual investors and mutual funds were the main buyers, purchasing shares worth $16.09 million and $12.79 million, respectively, while banks and development finance institutions were the largest sellers, with net sales of $23.50 million.