Moaaz Manzoor

Potential US-Pakistan collaboration on oil exploration and likely agreement on circular debt payment sparked optimism among investors at the Pakistan Stock Exchange (PSX) last week, with market indicators pointing toward a potentially promising period ahead.

The KSE-100 Index continued its upward trajectory, closing at an all-time high of 141,035 points, marking a weekly gain of 1,828 points or 1.3%. Market watchers see this as a sign of renewed confidence, driven by a mix of international cooperation and positive domestic developments. A key development that has caught attention is the recent signing of a trade agreement between the United States and Pakistan, aimed at reducing tariffs and encouraging bilateral investments.

Experts believe this move could pave the way for increased foreign inflows, which are much-needed to sustain the rally. “Potential US-Pakistan collaboration on oil exploration and news regarding agreement on circular debt payment likely in the next week provided much-needed impetus to energy sector stocks,” said Ali Najib, Deputy Head of Trading at Arif Habib Limited.

Meanwhile, the State Bank of Pakistan has decided to hold its policy rate steady at 11%, citing concerns about inflation and the trade deficit. Despite this pause, experts remain optimistic about the country’s macroeconomic outlook, especially with the country’s foreign exchange reserves slightly declining but still holding at $14.3 billion. “Continuing its winning streak, the KSE-100 Index recorded a sixth consecutive weekly gain of 1.31%, adding 1,828 points.

After opening at 139,760, the index touched a high of 141,161 and a low of 137,659, eventually settling at 141,035.” Najib added. On the pricing front, fuel prices saw a slight adjustment; petrol decreased by Rs7.54 per litre, and diesel increased marginally. The Consumer Price Index for July 2025 registered a moderate increase of 4.1% year-on-year, indicating controlled inflation, which could support consumer spending and corporate earnings in the coming weeks.

Market activity reflected this positive sentiment, with trading volumes averaging 561.7 million shares daily, down from last week but balanced by a substantial increase in traded value, which rose by 26% to $126.6 million. Leading stocks such as OGDC, PPL, and SYS contributed significantly to the week's gains, with OGDC alone adding 642 points. Sector-wise, the energy, technology, and oil marketing companies led the rally, supported by optimism around potential US-Pakistan cooperation in oil exploration and developments related to circular debt payments.

However, some sectors faced cautious trading, with investment banks and fertilizer companies showing some pressure, hinting that investors might remain selective in the near term. Experts suggest that upcoming corporate earnings reports and government announcements could influence the market’s direction next week. Looking ahead, analysts believe the PSX could see continued strength if key support levels hold.

“Support at around 140,000 points remains critical,” Najib pointed out.  “If the index maintains this level, we could see further upward movement, especially with valuations looking attractive and expectations of monetary easing in the pipeline.” Market participants are advised to stay alert as the earnings season progresses and new policy signals emerge.

Overall, the PSX’s recent performance has reinforced hopes that stability and strategic developments will attract renewed foreign interest. Investors are encouraged to watch upcoming news and earnings reports closely for signs of the next move in this promising market environment.

Credit: INP-WealthPk