Pakistan’s equity market is expected to remain sensitive to geopolitical developments and domestic policy decisions in the near term, with the upcoming International Monetary Fund review and monetary policy decision likely to remain key factors for investor sentiment. Weekly assessments from AKD Securities, Arif Habib Limited and Intermarket Securities indicate that renewed tensions involving the United States and Iran, combined with higher international oil prices, placed significant pressure on the Pakistan Stock Exchange during the week.
The benchmark KSE-100 Index declined by 4,817 points, or 2.75%, week-on-week, falling from 175,329 to 170,512 points. The decline has left the index down around 2% in calendar year 2026. Other major market indices also recorded losses, with the KSE-All Share Index falling 3% to 103,204 points, while the KSE-30 Index declined 2.8% to 50,839 points. The KMI-30 Index also dropped 2.8% to 243,246 points, while the Banking Trade Index declined 3.2% to 47,510 and the Oil and Gas Trade Index fell 2.7% to 34,789 points.
Market capitalisation of the KSE-All Share Index declined 3.1% to Rs19.016 trillion, equivalent to approximately $69 billion. Trading activity also weakened during the week, with average daily volumes declining 16.6% to 639.1 million shares. Average traded value fell 18.7% to $97.3 million. Another measure of average daily turnover showed a 17.5% decline to 801 million shares from 970.84 million shares in the preceding week, indicating weaker participation as investors remained cautious.
Geopolitical developments remained one of the main sources of uncertainty for the market. Escalating attacks along key shipping routes involving the United States and Iran, alongside attacks on Saudi energy facilities, increased concerns about global energy supplies and pushed oil prices higher. Brent crude reached a four-month high of $109 per barrel before retreating on Friday, allowing equities to recover slightly during the final trading session of the week. Arab Light crude ended at $106.84 per barrel, up around 15.8% over the week, while West Texas Intermediate rose 8.52% to $99.27. Spot Brent was reported at $120.28 per barrel, representing a 19.5% increase.
Higher global energy prices also affected domestic fuel prices. Petrol increased by Rs21.8 per litre to Rs370.8, while high-speed diesel rose by Rs23.72 to Rs398.4 per litre under the new daily pricing mechanism. Petroleum levy, Inland Freight Equalisation Margin and oil marketing company margins remained unchanged. Other commodities recorded mixed movements, with natural gas declining 5.89% to $2.74 per million British thermal units, while gold fell 2.02% to $4,340.33 per troy ounce. Silver declined 3.08% to $64.17, copper slipped 1.85% to $14,222.85 per tonne and coal increased 0.63% to $128.30 per tonne.
Despite pressure on the stock market, several domestic economic indicators showed improvement during the week. Workers’ remittances increased 17% year-on-year to $3.7 billion in August from $3.1 billion a year earlier, while also rising 1% from the previous month. During the first two months of fiscal year 2027, remittances reached $7.3 billion, representing a 15% increase compared with the same period last year.
Pakistan’s total liquid foreign exchange reserves also increased 5.3% week-on-week to $23.7 billion. Reserves held by the State Bank of Pakistan increased 7% to $18.3 billion, while commercial banks’ reserves remained broadly stable at $5.4 billion. The improvement pushed import cover to 2.74 months from 2.56 months previously. The rupee also strengthened marginally, appreciating 0.03% to close at Rs277.32 against the US dollar compared with Rs277.41 a week earlier. Six-month Karachi Interbank Offered Rate stood at 11.99%, increasing 13 basis points during the week.
Domestic energy production also improved. Oil production increased 1.8% week-on-week to approximately 68,400 barrels per day, supported mainly by higher output from Adhi, KPD and Sharf. Gas production rose 2% to 3,088 million cubic feet per day, with higher output from Mari and Uch and the revival of Shewa production at 68 million cubic feet per day. Detailed production figures showed oil output at 68,462 barrels per day as of August 31, with KPD production rising 9% and Adhi increasing 4%. Nashpa and Pasakhi production declined 1% and 2%, respectively.
The cement sector also recorded stronger financial performance during fiscal year 2026. The sector generated Rs138 billion in profits, representing a 13% year-on-year increase. Cement dispatches rose 7% to 50.5 million tonnes, while industry utilisation remained around 60% and finance costs declined 33%. Within AKD Securities’ coverage universe, cement sector profitability increased 18% year-on-year, supported by higher total offtakes and additional income.
Individual corporate results also provided positive developments. Kohat Cement reported fourth-quarter fiscal year 2026 earnings of Rs3.3 billion, equivalent to earnings per share of Rs3.6, compared with Rs2.4 billion and earnings per share of Rs2.6 a year earlier. Revenue increased 10% to Rs9.6 billion from Rs8.7 billion, while gross margins improved to 40.8% from 31.2%. Interloop reported fourth-quarter profitability of Rs3.8 billion, or earnings per share of Rs2.7, up 43% year-on-year, while revenue reached a record Rs55.6 billion. The company also announced a final cash dividend of Rs2 per share, bringing its full-year payout to Rs4 per share.
Developments in the energy sector included first gas flows from the Lundali-1 well in the Sukhpur-II Block in Sindh on September 6. The well was producing 10 million cubic feet per day for supply to Sui Southern Gas Company. The joint venture includes POGC with a 25% working interest, Mari Petroleum and Oil and Gas Development Company Limited with 30% each, and TPOC with 15%.
The government also approved the draft auto policy for fiscal years 2027 to 2031, although approval from the International Monetary Fund remains pending. Roshan Digital Account inflows increased 58% year-on-year to $259 million in August, while Naya Nazimabad Apartments Real Estate Investment Trust attracted strong investor demand. Its book building was oversubscribed eight times and the public offering was oversubscribed 4.3 times, allowing the trust to raise Rs1.01 billion against total demand of Rs5.6 billion.
On the international and policy front, a Qatari liquefied natural gas cargo bound for Pakistan cleared the Strait of Hormuz, while the government moved to reduce the high-speed diesel refining margin cap to $30 per barrel. Pakistan also signed a cybersecurity cooperation agreement with Saudi Arabia, while discussions indicated that Pakistan and Australia could soon finalise an investment agreement. These developments add to the broader policy and external factors being monitored by investors.
The upcoming IMF review remains one of the most important events for the market. The IMF mission is expected to arrive later this month to assess Pakistan’s progress under the $7 billion Extended Fund Facility and the $1.4 billion Resilience and Sustainability Facility. The review will cover the fourth EFF and third RSF reviews for the year ended June 2026, with talks expected to continue into early October. September 22 and September 23 have been identified as the respective start dates for the talks and mission visit.
Sector-wise, banks remained the largest drag on the KSE-100 Index, subtracting 1,605 points during the week. Cement stocks reduced the benchmark by 732 points, exploration and production companies contributed a 575-point decline, fertiliser stocks took away 286 points and investment banks reduced the index by 254 points. Miscellaneous companies contributed 247 points, while insurance stocks provided a positive contribution of 49 points.
Among individual stocks, PSEL gained 31.2%, while AICL and LCI also closed higher. PGLC and SSGC were the weakest performers, each declining 13.9%, followed by CHCC with a 10% fall. PSEL contributed approximately 283 points to the benchmark, while AICL added 49 points and LCI contributed seven points. On the negative side, UBL reduced the index by 475 points, followed by LUCK with 256 points, HBL with 229 points, ENGROH with 215 points and BAHL with 206 points.
Foreign investors and mutual funds remained net sellers, recording outflows of $7.2 million and $5.3 million, respectively. Individuals emerged as the largest net buyers with purchases of $10.8 million, while companies recorded net buying of $5.5 million. CNERGY led the trading volume chart with average daily trading of 91.2 million shares and a closing price of Rs12.9, followed by MDTL with 39.7 million shares, PRL with 39.4 million, WTL with 24.8 million and TSBL with 19 million shares.
Investor attention will now turn to the Monetary Policy Committee meeting and the auto sales update scheduled for September 14, along with upcoming corporate results. Market sentiment is expected to remain closely linked to developments in international oil prices, geopolitical conditions, the IMF review and the direction of monetary policy. Any easing of tensions in the Middle East, particularly a potential agreement between the United States and Iran, could reduce pressure on global oil prices and provide some relief to Pakistan’s equity market, while progress on economic reforms and improving domestic indicators could offer additional support.
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