KARACHI: The Pakistan Stock Exchange (PSX) recorded a fourth consecutive week of declines as domestic political uncertainty and geopolitical tensions weighed on investor sentiment amid inflation concerns and the prospect of an interest rate hike.

As a result, the benchmark KSE-100 index fell 0.4 per cent week-on-week, shedding 670 points to close at 166,419, according to Arif Habib Ltd (AHL).

Elevated crude oil prices, driven by US-Iran tensions, and expectations of monetary tightening by the State Bank of Pakistan (SBP) ahead of its upcoming policy meeting added to market pressure.

AKD Securities Ltd noted that in the outgoing week, the index recorded its steepest sell-off on Monday, losing 1,965 points after emergency and governor’s rule were imposed in PTI-ruled Khyber Pakhtunkhwa. It subsequently recovered some of the losses as initial selling pressure eased.

Geopolitical tensions, rising oil prices and monetary tightening concerns weigh on investor sentiment

Brent crude rose to $107 per barrel during the week amid disruptions to energy supplies through the Strait of Hormuz and renewed attacks on Saudi energy infrastructure, despite the International Energy Agency’s announcement of additional emergency oil reserve releases.

Sector-wise, exploration and production companies led the decline, dragging the index down by 330 points, followed by banks (319 points), cement (136 points), investment banks (109 points) and power companies (76 points).

Among individual stocks, Oil and Gas Development Company contributed most to the decline, shedding 161 points, followed by United Bank (136 points), Habib Bank and Pakistan Telecommunication Company (111 points each), and Pakistan Oilfields (95 points).

Fertiliser stocks provided the biggest support, adding 171 points, followed by oil marketing companies (63 points), refineries (60 points), pharmaceuticals (41 points) and fast-moving consumer goods companies (22 points).

Fauji Fertiliser Company was the top individual contributor, adding 85 points, followed by Systems Ltd (81 points), Pakistan State Oil (62 points), Engro Fertilisers (60 points) and Attock Refinery Ltd (44 points).

Average daily trading volume rose 5.2pc to 449 million shares, while average value traded fell 1.5pc to $65 million week on week.

On the economic front, the country’s current account deficit swelled to $356 million in September from $73m in August and a $123m surplus a year earlier, driven by a widening trade gap, according to AKD Securities. The cumulative deficit for the first quarter of FY27 reached $874m, up from $755m a year ago.

The trade deficit widened 5pc year-on-year and 7pc month-on-month to $3.53 billion in September. Exports rose 18pc year-on-year to $2.96bn, while imports increased 11pc to $6.49bn. In the first quarter, the trade gap widened 15pc to $10.77bn, with exports at $8.45bn and imports at $19.21bn.

Worker remittances increased 13pc year-on-year to $3.6bn in September. Meanwhile, the SBP’s foreign exchange reserves rose by $16m to $21.47bn as of Oct 9.

The government raised Rs685.5bn against a target of Rs550bn in a treasury bills auction, with the three-month tenor attracting the largest amount at Rs310.1bn. Yields moved in different directions across tenors.

Automobile sales, including cars, light commercial vehicles, vans and jeeps, fell 3pc month-on-month and 12pc year-on-year to 15,104 units in September, according to the Pakistan Automotive Manufacturers Association. However, cumulative sales rose 19pc to 50,480 units in the first quarter of FY27.

Large-scale manufacturing grew 0.7pc year-on-year in August but declined 5pc month-on-month. Pakistan’s real effective exchange rate rose to 108.93 in September from 107.92 in August, while the rupee appreciated marginally by 0.03pc to close at Rs276.91 against the dollar.

According to AHL, the PSX added a record 25,280 investor accounts in September, taking total unique identification numbers to 656,000, up 55pc from a year earlier.

Meanwhile, gross inflows under the Roshan Digital Account scheme reached $14.16bn by September, with net repatriable liabilities standing at $3.07bn.

Analysts said geopolitical developments and the September-quarter results season, beginning next week, would remain key market drivers. The KSE-100 was trading at a price-to-earnings ratio of 7.4 times, with a dividend yield of 6.8pc.

They said improving economic indicators and easing inflation could support the market, while any de-escalation in the Middle East could lower international oil prices and reduce the likelihood of monetary tightening.

Published in Dawn, October 18th, 2026