Karachi: Market volatility persisted in the past week as political uncertainty and geopolitical tensions in the Middle East affected investor confidence. The KSE100 Index experienced a significant initial decline, dropping 1,965 points on Monday due to the imposition of emergency and governor's rule in the KPK province, but partially rebounded in later sessions as selling pressure eased.
According to AKD Securities Limited, Brent crude prices remained high due to continued disruptions in energy supplies through the Strait of Hormuz and renewed attacks on Saudi energy infrastructure, reaching up to $107 per barrel despite the International Energy Agency's announcement of additional emergency oil reserve releases. This contributed to the KSE100 Index's 670-point decline to close at 166,420 points, marking a 0.4% decrease for the week.
Pakistan's macroeconomic landscape showed a current account deficit of $356 million in September, compared to a surplus of $123 million in the same period last year, indicating increased pressure on the external account. However, worker remittances grew by 13% year-on-year to $3.6 billion in September. The government also raised PKR 660 billion through the latest Treasury bill auction, with yields remaining stable after a sharp repricing in the previous auction. The State Bank of Pakistan's foreign exchange reserves increased by $16 million to $21.47 billion as of October 9. In the sectoral overview, passenger car sales fell by 9.8% year-on-year to 10,939 units in September, while textile exports rose by 5.2% year-on-year in the first quarter of fiscal year 2027, driven by growth in ready-made garments, knitwear, and cotton yarn.
Market analysts expect improvement based on strengthening economic indicators and easing inflationary pressures that could lower the likelihood of monetary tightening. Any positive developments in the Middle East conflict might moderate international oil prices, potentially serving as a catalyst for market recovery. The market continues to trade at attractive valuations with a forward price-to-earnings ratio of 6.4x. Top investment picks highlighted include OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP, and SYS.