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KARACHI, Aug. 3, 2026: Pakistan’s benchmark KSE-100 Index declined 2.3% month-on-month in July 2026 as renewed geopolitical tensions in the Middle East and higher oil prices dampened investor sentiment, according to a monthly market review by JS Research.
The report said Asian equity markets remained volatile during the month, with Pakistan, China, Taiwan, Vietnam, and South Korea posting losses. However, banking and refinery stocks outperformed the broader market, supported by the start of the corporate earnings season and progress on Pakistan’s refinery policy.
Brent crude oil briefly climbed above $100 per barrel following renewed US-Iran airstrikes and concerns over supply disruptions in the Strait of Hormuz and the Red Sea. Prices eased later after both sides paused military action.
Meanwhile, Pakistan introduced a daily fuel price adjustment mechanism in line with IMF recommendations. As a result, petrol prices rose 12% month-on-month, while diesel prices increased 26% during July.
The State Bank of Pakistan (SBP) kept its policy rate unchanged at 11.5%, citing expectations that inflation will gradually ease to around 7% by the end of the next fiscal year. The central bank also projected foreign exchange reserves to reach $20.2 billion by December 2026, supported by stronger remittances and exports.
In another positive development, S&P Global Ratings upgraded Pakistan’s long-term sovereign credit rating to ‘B’ from ‘B-‘, marking the country’s return to that rating level after nine years. The agency cited improving external accounts, macroeconomic stability, and a stable outlook.
Looking ahead, JS Research advised investors to remain cautious while monitoring developments in the US-Iran conflict and global oil prices. It expects corporate earnings, the MSCI Quarterly Index Review, the Auto Policy 2026-31, and the refinery policy to drive stock-specific activity in the coming weeks.
The brokerage’s top stock picks include OGDC, UBL, AKBL, ILP, AGP, NATF, GAL, INDU, MLCF, FCCL, and CHCC.
