By Moaaz Manzoor

The Pakistan Stock Exchange (PSX) closed lower during the first week of June, with the benchmark KSE-100 Index losing 3,484 points week-on-week to settle at 170,479 points, down 2 percent, as uncertainty surrounding US-Iran talks and caution ahead of the federal budget weighed on investor sentiment.

Investors remained cautious throughout the week as the market tracked diplomatic developments between Washington and Tehran, movements in international oil prices and expectations surrounding the FY27 federal budget, scheduled to be unveiled on June 10.

According to Arif Habib Limited (AHL), banks, investment banks, cement, power and fertiliser sectors were the major drags on the benchmark index during the week.

Sector-wise, banks emerged as the largest negative contributor, eroding 718 points from the KSE-100 Index. Investment banks pulled the index down by 423 points, followed by cement stocks, which shaved off 221 points. Power sector companies reduced the index by 172 points, while fertiliser stocks dragged it lower by 118 points.

On the positive side, technology stocks provided the strongest support, contributing 166 points to the benchmark index. Fast-moving consumer goods added 30 points, followed by transport with 27 points, synthetic and rayon with 7 points, and pharmaceutical stocks with 6 points.

At the company level, Engro Holdings was the biggest negative contributor, dragging the benchmark index down by 440 points. Bank AL Habib followed with a negative contribution of 244 points, while Lucky Cement eroded 222 points. Hub Power Company reduced the index by 165 points and Engro Fertilisers by 149 points.

Meanwhile, Pakistan Telecommunication Company Limited emerged as the largest positive contributor, adding 116 points to the index. Pakistan Oilfields contributed 65 points, followed by TRG Pakistan with 57 points, Ghandhara Industries with 49 points and Colgate-Palmolive with 38 points.

Trading activity improved in volume terms, although the value of shares traded declined. Average daily volumes increased 17.5 percent week-on-week to 623 million shares, while the average traded value fell 24 percent to $98 million, according to AHL.

AHL said the KSE-100 Index is expected to remain range-bound in the coming week as investors await the federal budget and greater clarity on key policy measures. It added that any positive development in the ongoing US-Iran negotiations could serve as a catalyst and provide upside potential to the market.

According to AHL, the KSE-100 Index is currently trading at 7.9 times earnings and a dividend yield of around 6.4 percent. Its top stock picks include Oil and Gas Development Company, Pakistan Petroleum Limited, Fauji Fertilizer Company, Lucky Cement, National Bank of Pakistan, Hub Power Company, Pakistan State Oil and Attock Refinery Limited.

AKD Securities said a constructive outcome of the US-Iran negotiations, along with the direction of international oil prices, would remain key near-term catalysts for the market.

It said the FY27 federal budget, scheduled for June 10, would also remain a major focus for investors. AKD added that the market continues to trade at attractive valuations, with a forward price-to-earnings multiple of 7.0 times.

The market’s near-term direction is likely to depend on clarity regarding budgetary measures, movements in global oil prices and tangible progress in US-Iran diplomacy. Until then, investors are expected to remain selective, with trading interest concentrated in fundamentally strong stocks.

Credit: INP-WealthPk