KARACHI: The Pakistan Stock Exchange (PSX) ended the week with a steep decline, shedding nearly 2,000 points on Friday, as investors reacted swiftly to heightened geopolitical instability in the Middle East. The benchmark KSE-100 index tumbled by 1,949.55 points, or 1.57 percent, closing at 122,143.57 amid rising fears of regional escalation following Israeli airstrikes on Iranian military and nuclear facilities.
The strikes, which reportedly caused significant material damage and human casualties, prompted Tehran to vow a retaliatory response. This rapidly unfolding geopolitical crisis created an atmosphere of uncertainty across global financial markets, including Pakistan, where investors offloaded positions in anticipation of further volatility.
From the opening bell, the PSX was under selling pressure. The KSE-100 index opened in negative territory and quickly deepened losses, reaching an intraday low of 121,605 points. This marked a decline of over 2,400 points during the day, before closing marginally above the day’s bottom. Analysts noted that the sell-off was broad-based, impacting nearly all major sectors, with particular pressure on heavyweight blue-chip stocks in fertiliser, cement, banking, and technology.
Ali Najib, Deputy Head of Trading at Arif Habib Limited, commented on the market’s response, saying, “The sharp correction was triggered by geopolitical anxieties and mirrored the negative sentiment seen in international and regional markets. Investors took a risk-off approach, leading to a swift and deep decline.”
Leading brokerage house Topline Securities highlighted that trading remained mostly negative throughout the session, with investor sentiment dampened by global market cues. The brokerage identified major draggers on the index, including Engro Holdings, Fauji Fertiliser, Lucky Cement, Bank Al-Habib, Meezan Bank, Systems Limited, and Pakistan Petroleum. These seven entities alone contributed a cumulative loss of 863 points to the index.
Investor participation also showed signs of fatigue, with the total trading volume dropping by 5.49 percent to 968.34 million shares compared to the previous day. Meanwhile, the value of traded shares plummeted by 41.51 percent, settling at Rs29.55 billion, reflecting a shift toward risk aversion and reduced institutional engagement.
Despite the sharp decline, market watchers are cautiously optimistic that a technical correction could soon emerge if geopolitical risks stabilize. However, the possibility of retaliatory military action and further regional instability remains a major overhang for global and domestic equity markets.
The PSX has remained sensitive to external shocks, especially those originating from the Middle East, due to Pakistan’s economic and energy linkages with the region. As a result, developments in the coming days will be closely monitored by institutional investors and policy stakeholders alike.
Friday’s downturn is one of the sharpest single-day declines in recent months, underlining the need for a robust risk management framework in Pakistan’s capital markets. The broader sentiment is likely to stay cautious unless a clear de-escalation is observed in the geopolitical landscape.