By Moaaz Manzoor

The Pakistan Stock Exchange (PSX) ended the outgoing week on a negative note, with the benchmark KSE-100 Index shedding 3,130 points, or 1.69% week-on-week, to close at 182,242 points as escalating tensions between the United States and Iran dampened investor sentiment and pushed international crude oil prices higher.

The market began the week on a strong footing, gaining 2,082 points on Monday and extending the previous week's rally. However, renewed geopolitical uncertainty following escalating hostilities between the US and Iran, coupled with US President Donald Trump's announcement of an end to the ceasefire, triggered broad-based selling, erasing earlier gains.

According to Arif Habib Limited (AHL), exploration and production companies exerted the largest drag on the benchmark index, shaving 648 points during the week. Fertilizer stocks reduced the index by 435 points, followed by cement companies with 425 points, investment banks with 351 points and banking stocks with 344 points.

On the positive side, refinery stocks added 115 points to the benchmark index. Synthetic and rayon companies contributed 38 points, followed by miscellaneous stocks with 21 points, sugar companies with 11 points and tobacco stocks with eight points.

At the company level, Fauji Fertilizer Company remained the largest negative contributor, erasing 410 points from the benchmark index. Engro Holdings reduced the index by 379 points, followed by Pakistan Petroleum Limited with 285 points, Oil and Gas Development Company with 255 points and Hub Power Company with 223 points.

Among the gainers, Habib Bank Limited added 161 points to the benchmark index, followed by Ghani Glass with 91 points, Cnergyico PK with 66 points, Attock Refinery Limited with 50 points and Ibrahim Fibres with 38 points.

Topline Securities attributed the market's decline to heightened geopolitical tensions between the US and Iran, which led to higher international crude oil prices and weakened investor confidence.

Likewise, on the investor flow side, insurance companies and mutual funds remained net sellers, offloading equities worth US$19.6 million and US$10.2 million, respectively. Individual investors and banks emerged as net buyers, purchasing shares worth US$13.5 million and US$9.5 million.

According to AHL, average daily trading volume increased 23.8% week-on-week to 1.071 billion shares, while the average daily traded value edged up 0.1% to US$171.5 million. Topline Securities similarly reported average daily traded value of Rs47.6 billion during the week, indicating sustained trading activity despite heightened market volatility.

Commenting on Friday's trading session, Ali Najib, Deputy Head of Trading at Arif Habib Limited, said the benchmark index rebounded 982 points, or 0.54%, as relatively stable geopolitical conditions, expectations of renewed US-Iran negotiations over the weekend and continued declines in international oil prices encouraged selective buying across the market.

Looking ahead, analysts expect market direction to remain largely dependent on geopolitical developments and the outcome of expected US-Iran negotiations. Najib said the ongoing corporate earnings season could also provide stock-specific opportunities for investors.

AHL similarly said the benchmark index's performance will remain contingent on developments in the Middle East, with progress in US-Iran talks likely to provide upside to the market. The brokerage noted that the KSE-100 Index is currently trading at a price-to-earnings ratio of 8.4 times and offers a dividend yield of 6.0%.

Credit: INP-WealthPk