By Moaaz Manzoor

The Pakistan Stock Exchange (PSX) remained under pressure last week, with the benchmark KSE-100 Index losing 5,520 points week-on-week to close at 165,596 points, a decline of 3.2 percent amid slower progress in US-Iran negotiations and cautious investor sentiment ahead of the federal budget, reports WealthPakistan.

The market remained volatile throughout the week as investors maintained a cautious approach amid uncertainty surrounding geopolitical developments and upcoming fiscal policy measures.

According to Arif Habib Limited (AHL), the decline in the benchmark index was driven mainly by heavy selling in banking, cement, and fertilizer stocks.

Sector-wise, the banking sector emerged as the largest drag on the index, eroding 2,492 points during the week. Cement stocks contributed a negative 834 points, followed by investment banks with 583 points, fertilizer with 392 points, and power sector companies with 201 points.

Despite the broader downturn, a few sectors managed to post positive contributions. Leather and tanneries added 59 points to the benchmark index, followed by textile spinning with 21 points, paper and board with 14 points, closed-end mutual funds with 3 points, and sugar with 1 point.

At the company level, United Bank Limited (UBL) remained the biggest negative contributor, dragging the index down by 1,094 points. Other major laggards included Engro Holdings (ENGROH), which eroded 549 points, Lucky Cement (LUCK) with 430 points, Habib Bank Limited (HBL) with 419 points, and Fauji Fertilizer Company (FFC) with 341 points.

On the positive side, TRG Pakistan added 98 points to the index, followed by Service Industries Limited (SRVI) with 59 points, K-Electric (KEL) with 33 points, Sazgar Engineering Works (SAZEW) with 21 points, and Gadoon Textile Mills (GADT) with 21 points.

Trading activity also weakened during the week, reflecting softer investor participation. Average daily traded volume declined 5.2 percent week-on-week to 827 million shares, while average traded value dropped sharply by 39.5 percent to $91 million.

Similarly, KSE-All Market Capitalization also witnessed a decline. According to PSX and AHL data, market capitalization in rupee terms fell 2.7 percent week-on-week to Rs18,390 billion, while in dollar terms it declined to $66 billion. On a calendar-year-to-date basis, market capitalization remained lower by 4.3 percent in rupee terms and 3.8 percent in dollar terms.

AHL said the KSE-100 Index's performance in the coming week is likely to remain dependent on geopolitical developments, while investor activity may remain cautious until greater clarity emerges regarding budgetary and taxation measures.

Meanwhile, AKD Securities said Iran-US negotiations and international oil price movements would remain key near-term market drivers. The brokerage noted that any easing of tensions around the Strait of Hormuz could strengthen investor confidence and improve overall market sentiment.

AKD Securities also highlighted that Pakistan’s recent receipt of $1.3 billion under the IMF’s Extended Fund Facility and Resilience and Sustainability Facility, along with the country’s debut Panda Bond initiative, has improved the country’s external financing outlook.

The brokerage further noted that the market continues to trade at attractive valuations, with the current price-to-earnings ratio standing at 7.3 times based on its December 2026 estimates.

Credit: INP-WealthPk