Karachi: Market instability persisted throughout the past week as ongoing fears surrounding the US-Iran conflict and heightened global energy prices continued to affect investor confidence. According to AKD Securities Limited, oil prices remained high for the majority of the week, reaching $105.3 per barrel, as supply chain issues and China's halt on oil product exports countered the effect of recovering Gulf crude flows. Consequently, the KSE-100 Index saw a downturn, falling by 2,610 points, or 1.5% over the week, to settle at 168,155 points. Market activity also saw a decline of 45% week-on-week, with the average daily traded volume at 647 million shares.
Despite these pressures, a slight relief was observed as Brent crude prices decreased to $99.5 per barrel towards the end of the week, amid increasing US pressure on Europe to release diesel stocks. Domestically, the high-speed diesel price dropped by PKR 12.8 per liter, a 3.1% decline week-on-week, while the price of motor spirit increased by PKR 1.4 per liter, a 0.35% rise week-on-week. On the macroeconomic front, inflation for September 2026 was recorded at 10.3% year-on-year, compared to 11.2% in August 2026, influenced by decreasing food prices. However, the trade deficit for September 2026 widened by 6% year-on-year to $3.6 billion.
In a related development, an International Monetary Fund mission initiated policy discussions in Islamabad on the fourth Extended Fund Facility (EFF) review and third Resilience and Sustainability Facility (RSF) review, aiming to unlock $1.2 billion in combined disbursements. Additionally, the Federal Board of Revenue collected PKR 3.1 trillion in the first quarter of fiscal year 2027, surpassing the IMF-agreed target by PKR 13 billion. On the monetary front, the State Bank of Pakistan raised PKR 853 billion through the treasury bill auction, with cut-off yields increasing by 61, 75, and 45 basis points across the 3-month, 6-month, and 12-month papers, respectively.
Looking forward, AKD Securities Limited anticipates an improvement in market conditions driven by strengthening economic indicators, with the upcoming IMF review serving as a key short-term catalyst. A potential US-Iran agreement could also help moderate international oil prices from their current elevated levels. The market continues to trade at attractive valuations, with a forward price-to-earnings ratio of 7.2 times. 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.