By Moaaz Manzoor

The Pakistan Stock Exchange (PSX) extended its rally during the outgoing week, with the benchmark KSE-100 Index gaining 5,801 points, or 3.23% week-on-week, to close at 185,372 points as easing geopolitical tensions in the Middle East pushed international oil prices lower and strengthened expectations of improving macroeconomic conditions.

According to Arif Habib Limited (AHL), banking stocks provided the biggest boost to the benchmark index, contributing 3,355 points during the week. Fertilizer companies added 446 points, followed by investment banks with 421 points, exploration and production companies with 365 points and cement stocks with 248 points.

On the downside, leather and tanneries emerged as the largest drag on the benchmark index, shaving 123 points. Auto assemblers reduced the index by 60 points, while oil marketing companies, miscellaneous stocks and automobile parts manufacturers also made negative contributions.

At the company level, United Bank Limited remained the largest positive contributor, adding 1,466 points to the benchmark index. Meezan Bank contributed 656 points, followed by Fauji Fertilizer Company with 499 points, Engro Holdings with 367 points and MCB Bank with 332 points.

Among the laggards, Service Industries erased 123 points from the index, while Millat Tractors reduced it by 87 points. Engro Fertilizers, K-Electric and Sui Northern Gas Pipelines also weighed on overall market performance.

Topline Securities said investor sentiment remained upbeat as lower international oil prices eased concerns over Pakistan's external account. The brokerage noted that Pakistan's trade deficit widened to US$4.5 billion in June, the highest monthly deficit recorded in the last four years, while headline inflation moderated to 11.07% from 11.66% in May, reinforcing expectations of improving macroeconomic stability.

According to AHL, average daily trading volume increased 7.1% week-on-week to 865 million shares, while average daily traded value rose 27.7% to US$171.3 million. Topline Securities similarly reported average daily traded value of Rs 48 billion during the week, indicating stronger investor participation.

Commenting on Friday's trading session, Ali Najib, Deputy Head of Trading at Arif Habib Limited, said the benchmark index gained 851 points on Friday as selective buying in banking and energy stocks offset profit-taking ahead of the weekend. He said trading activity remained robust, with 808 million shares changing hands and turnover reaching Rs42.4 billion.

Looking ahead, analysts expected the market to remain supported by easing inflation, lower international oil prices and growing expectations of monetary easing. Najib said the benchmark index could continue its upward trajectory and test fresh record highs, although geopolitical developments and the upcoming State Bank of Pakistan monetary policy meeting will remain key catalysts.

AKD Securities also expeced progress on a potential US-Iran agreement, moderating oil prices and favourable June 2026 corporate earnings to support sentiment in the near term, adding that the market continues to trade at attractive valuations with a forward price-to-earnings ratio of 7.1 times.

Credit: INP-WealthPk