By Moaaz Manzoor

The Pakistan Stock Exchange (PSX) staged a strong recovery in April 2026, with the benchmark KSE-100 Index gaining 14,251 points month-on-month to close at 162,994, delivering a return of 9.6% after a sharp decline in the previous month.

The market remained volatile throughout the period, as investor sentiment shifted between optimism and caution amid evolving geopolitical and economic developments. The rally was initially driven by optimism surrounding a potential US–Iran ceasefire, which supported strong buying in early sessions. However, momentum weakened later in the month due to softer-than-expected corporate earnings and renewed geopolitical uncertainty.

Despite these fluctuations, overall market participation improved significantly. Average daily traded volume surged 91% to 929 million shares, while average traded value rose 49% to $148 million, indicating a notable rebound in investor activity following subdued participation in March.

According to Arif Habib Limited, the recovery in the index was led primarily by heavyweights, with the banking sector emerging as the largest contributor, adding 5,529 points. Cement contributed 1,735 points, followed by the exploration and production sector with 1,133 points, and the fertilizer sector with 987 points.

At the company level, United Bank Limited led gains, contributing 1,721 points to the index. Other major contributors included Habib Bank Limited, Hub Power Company, Lucky Cement, and Oil and Gas Development Company, reflecting broad-based support from index-heavy stocks. In contrast, LCI remained the only notable laggard, exerting a minor drag on the index.

Sectoral performance also highlighted improving sentiment in select segments. Automobile parts emerged as the best-performing sector, gaining 37%, followed by modarabas (28%), synthetic (22%), and cable and electrical goods (21%).

Trading activity remained concentrated in key sectors, with technology, investment banks, banks, power, and food sectors dominating volumes. In value terms, banks led with $30 million, followed by cement and exploration sectors, indicating continued investor focus on cyclical and large-cap stocks.

Commenting on market performance, Ali Najib, Deputy Head of Trading at Arif Habib Limited, noted that the PSX ended April on a weaker note, with the KSE-100 Index falling 2,830 points, or 1.71%, on April 30 to close at 162,994.

He said the session came under pressure due to escalating geopolitical tensions, as heightened rhetoric between US and Iranian officials pushed international oil prices higher. This weighed on global equities, including the PSX, as Pakistan’s status as a net oil importer makes rising oil prices a key concern for macroeconomic stability and investor sentiment.

Najib added that the index dropped to an intra-day low of 160,391, down 5,433 points or 3.28%, before late-session value buying helped trim losses and allowed the market to close near the 163,000 level.

Looking ahead, he said elevated oil prices amid ongoing geopolitical tensions may keep the market cautious in the near term. The 160,000 level is expected to act as strong support, while 175,000 remains achievable if the geopolitical environment improves.

Meanwhile, AHL expects the market to remain sensitive to geopolitical developments, with any improvement likely to support further recovery. The anticipated approval of a $1.2 billion tranche from the International Monetary Fund, along with upcoming budget developments, is also expected to influence investor sentiment.

Despite recent volatility, valuations remain attractive, with the KSE-100 Index trading at a price-to-earnings ratio of 7.6x and offering a dividend yield of around 6.7%.

Credit: INP-WealthPk