Karachi: The benchmark KSE-100 Index experienced a slight increase of 0.3% over the past week, closing at 177,697 points, as the US-Iran situation remained stable, preventing oil prices from exceeding $90 per barrel. This development, combined with a sovereign rating upgrade by Moody's, has contributed to improved investor sentiment and market activity.

According to AKD Securities Limited, the US-Iran situation showed signs of stabilization as Iran engaged in discussions with Oman and Qatar, aiming to reopen the Strait of Hormuz. This geopolitical stability helped keep oil prices in check. Additionally, Moody's upgrade of Pakistan's sovereign rating to B3, attributed to enhanced governance, provided a positive boost to the market. The average daily trading volume increased by 24.7% to 1.3 billion shares, compared to the previous week's 1.1 billion shares.

Furthermore, the State Bank of Pakistan (SBP) reported a modest rise in foreign exchange reserves, reaching $17.1 billion as of August 21, 2026. The SBP also transferred PKR 1.9 trillion in profits to the federal government, exceeding budget expectations by PKR 496 billion. On the sectoral front, the banking sector experienced a 14% year-over-year increase in deposits, totaling PKR 39.1 trillion as of July 2026.

The outlook for the market remains positive, with expectations of continued improvement in economic indicators and easing geopolitical tensions. A potential agreement between the US and Iran could further stabilize international oil prices. The market is currently trading at attractive valuations, with a forward P/E of 7.0x. The KSE-100 Index is forecasted to reach 263,800 by December 2026, with top picks including OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP, and SYS.