Karachi: Market volatility was evident during the past week, with the ongoing US-Iran conflict and mixed signals at the United Nations General Assembly session in New York influencing global energy markets. According to AKD Securities Limited, oil prices rose, with Brent crude increasing by 1.0% week-on-week to $104.9 per barrel. This increase followed Saudi Arabia's partial restart of the East-West Pipeline, which was disrupted by Houthi missile attacks on the kingdom's energy infrastructure. Simultaneously, there were reports of US and Iranian negotiators considering a phased reopening of the Strait of Hormuz.
Domestically, the KSE-100 Index remained largely unchanged, closing at 170,765 points, a minor decrease of 0.1% from the previous week. However, market activity saw a significant increase of 107.7% week-on-week, with average daily trading volume reaching 1.2 billion shares. Fuel prices in Pakistan decreased over the week, with high-speed diesel and motor spirit prices dropping to 412 and 389 Pakistani rupees per liter, respectively.
The International Monetary Fund is currently conducting technical discussions in Karachi before starting formal policy negotiations in Islamabad later this month. Meanwhile, the State Bank of Pakistan's foreign exchange reserves saw a modest increase of $11 million, totaling $21.4 billion as of September 18. This increase ensures that the import cover remains above three months. Profit repatriation fell by 15% year-on-year to $296 million in August, with the financial sector leading this decline. Fertilizer offtakes dropped by 14% year-on-year in August due to a higher base in the same period last year and disruptions caused by the monsoon season. However, sales during the Kharif season have been higher compared to the previous year.
The outlook for the market is optimistic, with expectations of improvement driven by strengthening economic indicators. The upcoming IMF review is seen as a crucial factor in the near term. A potential US-Iran agreement could stabilize international oil prices, which are currently elevated. The market is trading at attractive valuations, with a forward price-to-earnings ratio of 7.2. The KSE-100 Index is projected to reach 263,800 by December 2026, with top stock picks including OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP, and SYS.