KARACHI: The Pakistan Stock Exchange (PSX) remained under sustained pressure for most of the week ended January 30, 2026, as the benchmark KSE-100 Index retreated sharply amid disappointment over monetary policy, heightened geopolitical tensions and weaker-than-expected corporate earnings, before staging a strong rebound in the final session on easing external risks and government support measures.
The KSE-100 Index closed the week at 184,174 points, registering a week-on-week decline of 4,992 points or 2.6 percent, after opening the week at a record 189,166.83 points.The market trended downward for the bulk of the week but recovered 1,836 points in Friday’s session, as sentiment improved following signs of easing geopolitical tensions and the announcement of targeted relief for the industrial sector.
The initial sell-off was triggered by the State Bank of Pakistan’s Monetary Policy Committee decision to keep the policy rate unchanged at 10.5 percent, defying widespread expectations of 50–100 basis points cut.
The decision dampened investor sentiment, which was further weakened by rising geopolitical tensions between the United States and Iran, as well as lower-than-expected quarterly results from Fauji Fertilizer Company (FFC), a heavyweight index constituent.
Sentiment began to stabilize toward the end of the week as geopolitical concerns started to ease and the government announced supportive measures for industry, including a 300 basis points reduction in the Export Finance Scheme (EFS) rate and a cut in electricity tariffs by Rs4.04 per unit, helping the market claw back a portion of earlier losses.
Despite the weekly decline in the benchmark index, market participation showed mixed signals. Average daily traded volume on the Ready Board declined 24.3 percent WoW to 862.37 million shares, while average daily traded value fell 9.4 percent to Rs55.28 billion.
As a result of the market downturn, PSX market capitalization declined 1.8 percent WoW to Rs20.83 trillion, while market capitalization in dollar terms fell to US$74.44 billion from US$75.82 billion.
On the macroeconomic and policy front, several developments shaped investor expectations. The Federal Constitutional Court upheld the legality of the super tax, overturning earlier high court rulings, a move expected to strengthen fiscal consolidation.
The decision is projected to enable the Federal Board of Revenue to generate over Rs300 billion in additional revenues in FY26.
Pakistan also made progress on debt management, having repaid more than Rs3.65 trillion in debt ahead of schedule over the past 14 months. In the energy sector, circular debt inflows declined to Rs75 billion in 1HFY26, bringing the total stock down to Rs1.68 trillion, easing pressure on the power sector.
To support credit growth, the State Bank of Pakistan reduced the average Cash Reserve Requirement (CRR) for commercial banks from 6 percent to 5 percent, a step aimed at stimulating private sector lending.
The banking sector also recorded the second-highest annual deposit growth on record, with total deposits rising to Rs37.4 trillion, providing additional support to the financial system.
On the external front, SBP-held foreign exchange reserves increased week-on-week, remaining stable at around US$16.1 billion as of January 23, while the Pakistani rupee appreciated 0.03 percent WoW, closing at Rs279.77–279.86 per US dollar, reflecting relative stability in the currency market.
Other notable developments during the week included the government setting a 5.1 percent GDP growth target for the FY26–27 federal budget, while the State Bank of Pakistan revised its FY26 GDP growth outlook upward to as high as 4.75 percent.
Meanwhile, Brent crude prices approached a six-month high amid concerns over potential disruptions linked to Iran, adding to global uncertainty. The IMF Managing Director also praised Pakistan’s reform momentum, lending support to the country’s ongoing economic adjustment efforts.
Sector-wise performance remained broadly negative. Autos were the only sector to close marginally higher, up 0.3 percent, while the Power sector remained flat. Losses were led by fertilizer (-6.9 percent), chemicals (-4.2 percent), refinery (-3.6 percent) and cement (-2.7 percent).
While engineering (-2.5 percent), pharmaceuticals (-2.4 percent), technology and communication (-2.4 percent), Oil and Gas Marketing Companies (-2.3 percent), exploration and production (-1.1 percent), banks (-0.9 percent), food (-0.3 percent) and textile composite (-0.2 percent) also ended the week in the red.
By traded volume, power sector stocks accounted for 16 percent of total market activity, followed by banks at 11 percent, technology and communication at 10 percent, food at 7 percent, while other sectors collectively contributed 48 percent.
Among individual stocks, JVDC led the gainers, rising 13.4 percent to Rs160.17, followed by SAZEW (+9.9 percent), KEL (+5.3 percent), MTL (+3.9 percent), NML (+2.1 percent), INDU (+2.0 percent) and PPL (+2.0 percent). On the losing side, HCAR fell 11.1 percent, AICL declined 10.0 percent, FFC dropped 9.6 percent, GADT lost 9.5 percent, FFL fell 8.4 percent, PAEL declined 7.5 percent, and LCI shed 7.4 percent.
Overall, the week was marked by monetary policy disappointment, geopolitical uncertainty and earnings pressure, partially offset by easing external risks, fiscal and energy-sector improvements, supportive banking-sector developments, and late-week government relief measures.
Copyright Business Recorder, 2026