By Moaaz Manzoor

The Pakistan Stock Exchange (PSX) extended its strong upward momentum in May 2026, with the benchmark KSE-100 Index gaining 10,969 points month-on-month to close at 173,963, delivering a return of 6.7 percent amid improving investor sentiment and easing geopolitical concerns.

The market remained broadly positive throughout the month as optimism grew over progress in ongoing US-Iran negotiations and a decline in international oil prices. Investor confidence was further supported by Pakistan’s role in facilitating diplomatic engagement, helping ease concerns over potential disruptions to global oil supplies and encouraging fresh buying across key sectors.

Trading activity, however, moderated during the latter part of the month due to Eid holidays. According to Arif Habib Limited (AHL), average daily traded volume declined 23.7 percent month-on-month to 708.6 million shares, while average daily traded value fell 24.6 percent to $111.7 million.

The month also witnessed several notable macroeconomic developments. Consumer Price Index (CPI) inflation rose to 10.9 percent in April 2026, while Pakistan’s economy expanded by 3.99 percent during the third quarter of FY26, driven largely by industrial growth. Pakistan also successfully issued its first-ever $250 million Panda Bond in China at a coupon rate of 2.5 percent, with investor demand exceeding the offering by more than five times.

According to AHL, the May rally was led primarily by heavyweight sectors. The banking sector contributed 2,663 points to the index, followed by fertilizer with 2,218 points, exploration and production with 1,737 points, and cement with 1,696 points.

At the company level, Fauji Fertilizer Company (FFC) emerged as the largest contributor, adding 1,856 points to the benchmark index. Other major contributors included United Bank Limited (UBL), Pakistan Petroleum Limited (PPL), Lucky Cement (LUCK) and Oil and Gas Development Company (OGDC), reflecting broad-based support from blue-chip stocks. On the downside, Attock Refinery Limited (ATRL), Attock Petroleum Limited (APL), Mehmood Textile Mills (MEHT), Pakistan State Oil (PSO) and Thal Limited (THALL) were among the notable laggards.

Sectoral performance also reflected improving sentiment across selected segments. The woollen sector led gains with a 31 percent increase, followed by tobacco at 16 percent, fertilizer at 15 percent, synthetic at 13 percent and miscellaneous sectors at 12 percent.

Among individual stocks, TRG Pakistan, Pakistan Telecommunication Company Limited (PTCL), Pioneer Cement (PIOC), Service Industries (SRVI) and Ghandhara Automobiles (GADT) recorded gains of 32 percent, 31 percent, 28 percent, 26 percent and 22 percent, respectively. Meanwhile, MEHT, YOUW, APL, ATRL, IBFL and THALL ranked among the worst performers during the month.

Trading volumes remained concentrated in a handful of sectors, with oil and gas marketing companies (OGMCs), technology, power, food, investment banks and commercial banks accounting for the largest share of activity. On a stock-wise basis, K-Electric (KEL), Hascol Petroleum (HASCOL), Cnergyico (CNERGY), Bank of Punjab (BOP) and WorldCall Telecom (WTL) led trading volumes.

In value terms, banks topped the list with average daily traded value of $17 million, followed by cement at $14 million, exploration and production at $12 million, OGMCs at $10 million and technology at $9 million. At the company level, OGDC, PPL, BOP, DG Khan Cement (DGKC) and HASCOL recorded the highest traded values.

Speaking with Wealth Pakistan, Syed Zafar Abbas, Manager at Zahid Latif Securities, said the stock market had performed better than expected during May, with the benchmark index recovering strongly after recently falling to the 162,000-163,000 range.

He said the improvement came gradually as tensions surrounding the US-Iran tensions eased, allowing the market to end the month on a positive note despite periods of volatility.

“Not only Pakistan’s stock market, but stock markets around the world have also rebounded, while gold and crude oil markets have remained under pressure. As the situation improves, there is room for further improvement,” Abbas said.

Meanwhile, Ali Najib, Deputy Head of Trading at Arif Habib Limited, said the PSX witnessed another strong trading session at month-end, with the KSE-100 Index rising 2,238 points, or 1.30 percent, to close May at 173,963.

He said the market opened on a strong footing as investor sentiment strengthened amid encouraging progress in US-Iran negotiations and declining international oil prices. Broad-based buying emerged following positive developments over the Eid holidays, while expectations of a potential diplomatic breakthrough continued to support market optimism.

Looking ahead, Najib said developments in US-Iran negotiations would remain a key market trigger, although lingering uncertainty could continue to generate volatility across regional markets.

Credit: INP-WealthPk