KARACHI: The Pakistan Stock Exchange (PSX) extended its decline for an eighth consecutive week, with the benchmark KSE-100 index closing lower in a holiday-shortened trading period ahead of Eidul Fitr.
The market operated for four sessions during the final week of Ramazan, while the current week is also shortened due to the Pakistan Day holiday on March 23.
According to Topline Securities Ltd, the KSE-100 index declined 0.73 per cent week-on-week to close at 152,740 points, losing 1,126 points. The decrease was mainly due to rising geopolitical tensions in the Middle East, particularly the US-Israel conflict with Iran, which drove volatility in global energy prices and eroded investor confidence.
Market activity remained subdued, with an average daily traded volume of 321 million shares and a traded value of Rs20 billion.
Index slips for eighth straight week as Middle East conflict weighs on sentiment
Analysts at Arif Habib Ltd observed increased volatility throughout the week, driven by ongoing geopolitical uncertainty and selling pressure. Foreign investors remained net sellers, offloading shares worth $9.8 million, while mutual funds also recorded net sales of $4.6m. Conversely, banks and individual investors provided support, purchasing shares worth $8.2m and $2.5m, respectively.
On the macroeconomic front, several indicators showed improvement. Pakistan posted a current account surplus of $427m in February, significantly higher than the $68m surplus recorded in January and marking the highest level since March 2025. The real effective exchange rate (REER) eased to 102.54 from 103.29 a month earlier, suggesting improved external competitiveness.
Large-scale manufacturing (LSM) output rose 10.5pc year-on-year and 12.1pc month-on-month in January, while technology exports increased 20pc year-on-year to $365m in February, though marginally declining on a monthly basis. Power generation also grew 11pc year-on-year to 7,696 gigawatt-hours in the same month.
However, treasury bill yields rose sharply by 51 to 100 basis points across tenors in the latest auction, where the government raised Rs1.05 trillion against a target of Rs700bn, reflecting tightening liquidity conditions.
Other indicators showed mixed trends. Auto financing rose 35.3pc year-on-year to Rs337bn in February, while net foreign direct investment recorded an inflow of $214m, compared to an outflow of $173m in January. Despite this, cumulative foreign direct investment for the first eight months of FY26 declined 33pc year-on-year.
The rupee remained largely stable against the dollar, appreciating marginally by 0.02pc week-on-week to close at Rs279.23.
AKD Securities Ltd also highlighted continued market volatility. It noted that improved external accounts were largely driven by higher workers’ remittances, while the automobile and textile sectors led industrial growth.
Sector-wise, woollen, synthetic and rayon, and closed-end mutual funds emerged as top performers, while leather and tanneries, commercial banks and miscellaneous sectors lagged.
Key developments during the week included Pakistan securing alternative fuel supplies from Gulf countries, the Asian Development Bank unveiling a $10bn financing strategy, and a government proposal to keep fuel prices unchanged until the end of March.
Analysts expect market direction to remain tied to geopolitical developments and post-Ramazan sentiment, with investors closely watching upcoming inflation data. The benchmark index is currently trading at a price-to-earnings ratio of 7.5 times, offering a dividend yield of around 6.8pc.
Looking ahead, AKD Securities said investor confidence would depend on progress in easing regional tensions, energy policy measures and developments related to the International Monetary Fund review. It added that any de-escalation in the Middle East conflict could trigger a market rebound, given relatively attractive valuations, with the forward price-to-earnings ratio estimated at 6.6 times.
Published in Dawn, March 24th, 2026