The Pakistan Stock Exchange ended the week on a negative note as investors reacted cautiously to rising global oil prices, tightening shipping conditions in the aftermath of escalating regional tensions, and uncertainty ahead of the State Bank of Pakistan’s upcoming monetary policy announcement. Market sentiment weakened throughout Friday’s trading session, leading to a sharp decline in the benchmark KSE-100 Index.
At the close of trading, the KSE-100 Index settled at 157,496.1 points, registering a drop of 3,714.57 points or 2.3 percent compared with the previous close of 161,210.67. The session reflected heightened volatility, with the index moving between an intraday high of 161,435.83 points, representing a modest gain of 225.16 points or 0.14 percent, and a low of 157,072.64 points, marking a fall of 4,138.03 points or 2.57 percent.
Market participants pointed to a combination of global and domestic factors that weighed on investor confidence. According to Huzaifa Riaz, Director at Mayari Securities (Private) Limited, the market remained under pressure as global oil prices continued to rise and shipping constraints tightened due to the evolving post-war environment in the region. These developments have created concerns about supply chain disruptions and potential cost pressures on the broader economy, prompting investors to adopt a more cautious stance.
Riaz noted that traders were also reluctant to take aggressive positions ahead of the State Bank of Pakistan’s next monetary policy decision, which is scheduled to be announced soon. With uncertainty surrounding the future interest rate path, many investors preferred to limit exposure and wait for clarity from policymakers before making new commitments in the market.
A separate review by Topline Securities indicated that the decline also reflected profit-taking following Thursday’s strong rally. In the previous session, the KSE-100 Index had surged by 5,433.46 points, or 3.49 percent, closing at 161,210.68 after climbing from 155,777.21. However, as the weekend approached and geopolitical concerns intensified, investors moved to reduce their positions, particularly amid fears that the ongoing conflict between the United States and Iran could evolve into a prolonged confrontation.
Topline’s analysis showed that several heavyweight stocks played a major role in pulling the index lower. Companies including United Bank Limited, Engro Holdings, Fauji Fertilizer Company, Lucky Cement, Hub Power Company, Meezan Bank, Systems Limited, Oil and Gas Development Company, and Bank Alfalah collectively dragged the index down by approximately 2,124 points.
Despite the market’s decline, trading activity remained relatively robust. Pakistan Petroleum Limited led the market in terms of traded value, generating Rs1.83 billion in transactions during the session. It was followed by Oil and Gas Development Company with Rs1.66 billion, Attock Refinery Limited with Rs1.62 billion, United Bank Limited with Rs1.16 billion, and National Bank of Pakistan with Rs980 million. Overall market activity reached a total volume of around 360 million shares with a combined trading value of approximately Rs23 billion.
Investors are also closely watching the State Bank of Pakistan’s monetary policy review scheduled for Monday. A Reuters survey conducted among analysts suggests that policymakers are likely to maintain the current policy rate at 10.5 percent. All ten analysts surveyed in the poll expect no change in the benchmark rate after the central bank also opted to hold rates steady in January.
The policy outlook comes after a period of significant monetary easing. Since mid-2024, the State Bank has reduced the policy rate by a cumulative 11.5 percentage points from a record high of 22 percent in an effort to support economic activity.
However, analysts caution that rising energy prices may complicate the inflation outlook. AKD Securities analyst Muhammad Aliv indicated that the direction of energy prices will likely play a critical role in determining the future path of interest rates. He projected that inflation could average around seven percent during the second half of fiscal year 2026.
Research analysts also highlight the broader macroeconomic implications of rising oil prices. Waqas Ghani, head of research at JS Capital, explained that higher crude prices tend to widen Pakistan’s trade deficit while putting pressure on the local currency. According to Ghani, every $10 increase in the global price of crude oil typically adds about 0.5 percentage points to domestic inflation. Pakistan’s inflation rate was recorded at seven percent in February, up from 5.8 percent in January.
As geopolitical tensions continue to influence global energy markets, investors on the Pakistan Stock Exchange are expected to remain cautious in the coming sessions, particularly as they assess the impact of external shocks on inflation, interest rates, and the broader economic outlook.
Follow the PakBanker Whatsapp Channel for updates across Pakistan’s banking ecosystem