Karachi: Market volatility persisted over the past week, driven by geopolitical tensions following continued Houthi attacks on Saudi Arabia and reports of a potential U.S. attack on Iran after the midterm elections. As a result, Brent crude prices rose by 6.4% week-on-week to $114.9 per barrel as of Friday. The KSE100 Index saw a decline of 2.4%, falling by 4,045 points to close at 162,375 points, and the average daily trading volume dropped by 13.4% to 496 million shares.
According to AKD Securities Limited, domestic fuel prices saw a reduction, with high-speed diesel and petrol prices decreasing by PkR5.2 per liter and PkR12.5 per liter, respectively. This reduction was attributed to a decrease in the refinery crack cap and stable Dubai crude oil prices. On the macroeconomic front, the projected GDP growth for FY26 was revised slightly down to 3.65% from provisional estimates of 3.7%, compared to 3.1% in FY25. The World Bank projected GDP growth for FY27 at 3.8% with an inflation rate of 8.2%.
The State Bank of Pakistan's foreign exchange reserves increased by $19 million to $21.49 billion as of October 16th. In the banking sector, deposits rose by 16% year-on-year to PkR40.8 trillion by the end of September 2026, while consumer auto financing surged by 33.6% year-on-year to PkR407 billion in the same month. Urea offtakes increased by 42% year-on-year to 611,000 tons in September 2026, while DAP offtakes declined by 30% year-on-year to 68,000 tons. Power generation saw a 6% year-on-year growth in the first quarter of FY27, and cotton arrivals increased by 8% year-on-year to 4.1 million bales as of October 15th.
Looking ahead, market improvement is anticipated due to strengthening economic indicators. The forthcoming Monetary Policy Committee meeting could be pivotal, with expectations for the central bank to maintain the status quo. Positive developments in the Middle East conflict could moderate international oil prices, potentially easing monetary conditions. The market remains attractive with a forward price-to-earnings ratio of 5.9x, with top investment picks including OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP, and SYS.