KARACHI: The Pakistan Stock Exchange (PSX) remained under sustained pressure during the week ended March 19, 2026, as it extended its losing streak to eight consecutive weeks, reflecting persistent investor caution amid escalating geopolitical tensions in the Middle East and a mixed domestic macroeconomic backdrop.
The benchmark KSE-100 Index declined by 1,126 points on a week-on-week basis, or 0.73 percent, to close at 152,740 points compared with the previous week’s close of 153,866 points.
The continued decline in the index was largely attributed to further escalation in the Middle East conflict involving the United States, Israel and Iran, which kept global energy markets volatile and weighed heavily on investor sentiment in Pakistan’s equity market.
As a net energy importer, Pakistan remains highly sensitive to fluctuations in international oil prices, making the domestic market particularly vulnerable to geopolitical developments affecting crude supply and pricing.
Despite the prevailing uncertainty, domestic fuel prices remained unchanged during the week. The government maintained petrol prices at Rs321.17 per litre and high-speed diesel at Rs335.86 per litre.
However, the Price Differential Claim (PDC) increased significantly, rising by Rs28.35 per litre for petrol and Rs101.36 per litre for diesel, indicating mounting fiscal pressure from energy subsidies and pricing adjustments.
On the external front, Pakistan’s foreign exchange reserves held by the State Bank of Pakistan (SBP) showed marginal improvement, increasing by USD13 million to USD16.4 billion during the week ended March 13, 2026.
Analysts expect SBP’s liquid foreign exchange reserves to further improve and reach approximately USD17.4 billion by June 2026, supported by continued inflows and stabilization in the external account.
Encouragingly, Pakistan recorded a current account surplus of US$427 million in February 2026, a sharp improvement compared with a surplus of USD68 million in January.
The improvement in the external balance was driven primarily by higher workers’ remittances and contained import growth, reflecting the impact of policy measures aimed at stabilizing the balance of payments.
Currency competitiveness also improved slightly during the period, as Pakistan’s Real Effective Exchange Rate (REER) declined to 102.54 in February 2026 from 103.3 in January, indicating a marginal improvement in export competitiveness.
Meanwhile, macroeconomic activity showed signs of recovery, with the Large Scale Manufacturing (LSM) Index expanding by 10.5 percent year-on-year and 12.1 percent month-on-month in January 2026, supported by stronger output in key sectors.
The technology sector also continued to contribute positively to the external account. Pakistan’s monthly IT exports for February 2026 stood at US$365 million, reflecting a 20 percent year-on-year increase, although the figure was slightly down by 2 percent on a month-on-month basis.
Monetary conditions tightened somewhat during the week as treasury bill yields rose by 51 to 100 basis points across different tenors in the latest auction, reflecting evolving liquidity conditions and inflation expectations in the financial system.
The rise in yields added to investor caution in equities as higher fixed-income returns tend to divert funds away from the stock market.
Trading activity on the PSX moderated during the week as participants adopted a wait-and-see approach.
Average daily traded volume declined to 321 million shares, while the average daily traded value stood at approximately Rs20 billion, indicating reduced participation compared with earlier weeks when volumes had remained elevated during periods of heightened volatility.
Flow data revealed that foreign investors and mutual funds remained net sellers during the week, offloading equities worth US$9.8 million and US$4.6 million, respectively.
In contrast, local banks and individual investors provided some support to the market by absorbing the selling pressure, recording net purchases of US$8.2 million and US$2.5 million, respectively.
The continued exit of foreign capital highlighted lingering concerns about geopolitical risk and global financial market conditions.
Sector-wise performance during the week remained mixed. Woollen, synthetic and rayon, and close-end mutual fund sectors emerged as top performers, posting gains of 9.0 percent, 6.0 percent and 4.2 percent, respectively.
On the other hand, leather and tanneries, commercial banks and miscellaneous sectors were among the worst performers, declining by 5.1 percent, 5.0 percent and 4.1 percent, respectively, as risk-off sentiment dominated trading.
Among individual stocks, PKGP led the gainers’ chart with a sharp increase of 22.1 percent, followed by ABOT which gained 10.0 percent, IBFL which advanced 9.2 percent, BNWM which rose 9.0 percent, and KOHC which added 5.7 percent during the week. On the flip side, NBP emerged as the worst performer, dropping 12.0 percent, while AICL declined 10.2 percent, PABC fell 8.1 percent, UNITY lost 7.5 percent, and SRVI shed 6.7 percent.
Market capitalization also edged lower during the period, with total market cap standing at approximately Rs17.07 trillion (USD61.12 billion) compared with Rs17.33 trillion (USD62.04 billion) in the previous week, mirroring the decline in the benchmark index and continued erosion in equity valuations.
Analysts noted that, despite the ongoing correction, valuations have become increasingly attractive following the prolonged decline in the market. Forward price-to-earnings multiples have compressed to around 6.6 times, which is considered relatively low by historical standards and may offer opportunities for long-term investors once geopolitical risks begin to ease.
Looking ahead, market participants are expected to remain focused on developments in the Middle East during the upcoming holiday period, as geopolitical news flow is likely to remain the key driver of near-term direction for the KSE-100 Index.
Any signs of de-escalation could trigger a relief rally, while further escalation may prolong the current bearish trend in Pakistan’s equity market.
Copyright Business Recorder, 2026