KARACHI: Escalating tensions between the United States and Iran weighed heavily on investor sentiment during the outgoing week, pulling the Pakistan Stock Exchange (PSX) lower as concerns over regional stability and rising oil prices prompted cautious trading across most sectors.
The benchmark KSE-100 Index declined by 2.0 percent, or 3,483.87 points, on a week-on-week basis to close at 170,478.94 points, compared to 173,962.81 points a week earlier. The market remained under pressure throughout the week as continued military tensions between Washington and Tehran heightened uncertainty regarding global energy supplies and broader geopolitical stability.
The Business Recorder indices also mirrored the broader market’s weakness during the week. The BRIndex100 closed at 18,850.25 points, registering a decline of 419.04 points on a week-on-week basis. Total turnover in the index stood at 2.14 billion shares, translating into an average daily turnover of approximately 427.85 million shares.
Similarly, the BRIndex30 settled at 68,904.70 points, posting a weekly loss of 1,077.44 points. Total turnover in the index amounted to 1.53 billion shares during the week, averaging approximately 306.36 million shares per trading day.
According to JS Research, investor confidence remained subdued amid fears that further escalation in the conflict could disrupt oil flows through the region and add pressure to inflationary trends. Reflecting these concerns, international oil prices moved higher during the week, with Brent crude gaining 4.0 percent week-on-week to reach $95 per barrel.
Domestic macroeconomic indicators presented a mixed picture. Pakistan’s monthly trade deficit narrowed by 14 percent year-on-year to USD2.6 billion, primarily due to a 7 percent decline in imports. However, the cumulative trade deficit during 11MFY26 widened by 17.5 percent year-on-year to USD34.8 billion, as imports increased 5.9 percent over the corresponding period of the previous fiscal year.
Inflationary pressures continued to intensify, with Consumer Price Index (CPI) inflation accelerating to 11.7 percent in May 2026, the highest level recorded in the last 23 months. The rising inflation reading reinforced concerns regarding future monetary policy direction and the impact of higher energy costs on the economy.
Fiscal challenges also remained prominent. The Federal Board of Revenue (FBR) continued to miss collection targets, resulting in a cumulative tax shortfall of Rs868 billion during 11MFY26. Total tax collections reached Rs11.2 trillion, falling short of the revised target of Rs12.09 trillion, highlighting ongoing revenue mobilisation challenges ahead of the federal budget.
Meanwhile, the government postponed the announcement of the Federal Budget 2026-27 to June 10, amid continued negotiations with the International Monetary Fund (IMF) regarding revenue measures, development expenditures and fiscal consolidation targets. Investors largely adopted a wait-and-see approach ahead of the budget and IMF-related developments.
Providing some support to sentiment, the State Bank of Pakistan’s foreign exchange reserves increased by USD43 million week-on-week to USD17.19 billion as of May 29, 2026, indicating relative stability in the country’s external position despite rising geopolitical risks.
A weekly snapshot of market activity showed that total market capitalisation declined by 1.2 percent to Rs18.93 trillion, compared with Rs19.17 trillion recorded a week earlier. In dollar terms, market capitalisation also fell 1.2 percent to USD67.99 billion, down from $68.82 billion.
Despite the decline in the benchmark index, trading volumes improved. Average daily traded volume in the ready market increased by 17.5 percent to 623.37 million shares, compared to 530.71 million shares in the preceding week. However, average daily traded value dropped by 24.4 percent to Rs27.22 billion, compared with Rs36.01 billion previously. In dollar terms, average daily turnover declined by the same margin to USD97.74 million from USD129.31 million.
Sector-wise performance remained broadly negative, with only a handful of sectors managing to close in positive territory. The Technology and Communication sector emerged as the best performer, gaining 1.8 percent, followed by Engineering up 0.4 percent, while Chemical and Food sectors each added 0.1 percent.
On the downside, the Power sector recorded the steepest decline of 3.1 percent, followed by Exploration and Production companies down 2.9 percent, Cement declining 2.6 percent, Oil Marketing Companies losing 2.1 percent, and the benchmark KSE-100 Index falling 2.0 percent. Other notable laggards included Refineries down 1.8 percent, Banks down 1.6 percent, Fertiliser down 1.1 percent, Pharmaceuticals down 0.6 percent, Automobiles down 0.2 percent, and Textile Composite down 0.1 percent.
Trading activity remained concentrated in a few key sectors. The Technology and Communication sector accounted for 17 percent of total traded volume, followed by Cement with 11 percent, Oil Marketing Companies with 8 percent, Engineering with 7 percent, and Food sector with 7 percent, while all other sectors collectively contributed 50 percent of market turnover.
Among individual stocks, Honda Atlas Cars (HCAR) emerged as the top gainer of the week, advancing 11.6 percent to close at Rs269.12, followed by Pakistan Stock Exchange Limited (PSX) up 11.0 percent, Ghani Glass (GHNI) gaining 6.9 percent, IBL Finance (IBFL) rising 6.4 percent, PGLC increasing 5.4 percent, Pakistan Telecommunication Company Limited (PTC) adding 5.2 percent, and HGFA advancing 4.2 percent.
On the losing side, Ghani Global Holdings (GHGL) led decliners with a 5.4 percent fall, followed by National Bank of Pakistan (NBP) down 5.2 percent, Attock Petroleum (APL) declining 5.1 percent, Engro Holdings (ENGROH) losing 5.1 percent, Packages Limited (PKGS) down 4.9 percent, Lucky Cement (LUCK) falling 4.8 percent, and Maple Leaf Cement Factory (MLCF) shedding 4.5 percent.
Regional equity markets also reflected mixed sentiment during the week. The Philippines emerged as the strongest performer, gaining 2.9 percent, followed by Taiwan up 0.8 percent and Malaysia advancing 0.6 percent. Conversely, Indonesia recorded the sharpest decline of 8.7 percent, followed by South Korea down 3.7 percent, China losing 1.0 percent, and India slipping 0.7 percent.
Overall, the market remained hostage to geopolitical developments throughout the week, as rising oil prices, accelerating inflation, fiscal pressures and uncertainty surrounding the federal budget outweighed the positive impact of improving external reserves and stronger trading activity. Investors are expected to closely monitor developments on the US-Iran front, IMF negotiations and budget announcements for directional cues in the coming weeks.
Copyright Business Recorder, 2026