Karachi: The Karachi Stock Exchange (KSE) faced a challenging week as geopolitical tensions and high oil prices exerted pressure on the market. The benchmark KSE-100 index declined by 1,325 points, or 0.7%, closing at 180,105 points. Despite the downturn, market activity saw a boost, with daily trading volumes increasing by 13% compared to the previous week.

According to AKD Securities Limited, the uncertainty surrounding the US-Iran deal and the reopening of the Strait of Hormuz contributed to elevated Brent crude prices, which crossed the $90 per barrel mark during the week before settling at $86 per barrel. However, positive corporate earnings and macroeconomic developments offered some relief to investors. Notably, Pakistan signed a mutual defense agreement with Turkiye and Saudi Arabia, expanding its earlier pact with the Kingdom of Saudi Arabia.

Economic indicators showed improvement, with the fiscal deficit for fiscal year 2026 reaching a record low of 2.6% of GDP, while the primary surplus hit a record high of 2.9% of GDP. This was attributed to increased tax revenue and reduced markup expenses amid declining interest rates. Additionally, the government's debt showed its lowest annual rise in two decades, while workers' remittances rose by 13% year-on-year to $3.6 billion in July 2026. The auto sector also experienced a significant boost, with sales increasing by 74% year-on-year.

Looking ahead, market analysts anticipate an improvement in market conditions, driven by strengthening economic indicators and easing geopolitical tensions. A potential US-Iran deal could lead to a moderation in international oil prices, further supporting market sentiment. The KSE-100 index is forecasted to reach 263,800 points by December 2026, with top stock picks including OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP, and SYS.