PSX Weekly Wrap: KSE-100 Sheds 1.6% Amid Hormuz Tensions, Political Noise

The Pakistan Stock Exchange (PSX) concluded a turbulent week on a downbeat note, with the benchmark KSE-100 index settling at 177,167 points—a decline of 2,938 points, or 1.63%, week-on-week. The selloff was driven by persistent uncertainty surrounding the US-Iran standoff and domestic political disturbances.

Following a volatile stretch that pressured the index lower throughout most sessions, the market mounted a modest recovery on Friday, adding 575 points (0.33%) to close at 177,167. Earlier in the week, the gauge had dipped into the 176,500–176,800 range before the late-session rebound.

The week opened on a positive note Monday, with the KSE-100 advancing 398 points (0.22%) to 180,502. However, sentiment reversed sharply Tuesday as the index tumbled 2,547 points (1.41%) to 177,956. The downward trajectory continued Wednesday, shedding another 1,109 points (0.62%) to close at 176,846. Thursday extended the cautious tone with a marginal loss of 254 points (0.14%), taking the index to 176,591.

Arif Habib Limited (AHL), in its weekly review, attributed the 1.63% weekly decline to ongoing geopolitical friction over the US-Iran conflict alongside local political noise.

On the economic front, the current account deficit narrowed significantly to $328 million in July 2026, down 38% from $529 million a year earlier. On a month-on-month basis, the deficit contracted 59.7% from $814 million in June 2026.

Large-scale manufacturing (LSM) output fell 3.5% year-on-year in June 2026, with a 6.1% month-on-month decline. However, for the full fiscal year FY26, the LSM index posted 5% year-on-year growth.

Foreign direct investment (FDI) showed marked improvement, with net inflows reaching $179 million in July 2026—up 265% month-on-month from $49 million in June. Technology exports accelerated 18% year-on-year to $417 million in July, accounting for 45% of total services exports.

Auto financing expanded 35.2% year-on-year to Rs386 billion in July 2026, compared to Rs286 billion in July 2025, while rising 1.2% month-on-month.

Power generation surged 7% year-on-year to 15,122 GWh in July, marking the second-highest July output on record, buoyed by record hydel, local coal, and imported coal-based generation. Oil production edged down 0.5% week-on-week to 67,800 barrels per day, largely due to lower flows from Nashpa, while gas production inched up 1.9% week-on-week to 2,995 mmcfd, driven by the revival of Uch gas field output.

The government raised Rs517.9 billion in a T-bill auction, surpassing the Rs500 billion target. Cut-off yields rose across all tenors, with the bulk—Rs349.5 billion—raised through three-month paper. The Pakistani rupee appreciated marginally, strengthening 0.03% to close at Rs277.56 per US dollar.

“Going forward, market direction will likely remain sensitive to geopolitical developments, while the ongoing earnings season is expected to provide support to overall market performance,” AHL noted.

Wadee Zaman of JS Global observed that the KSE-100 lost ground during the week, closing at 177,167—down 2,938 points (1.6% WoW)—amid heightened political and regional tensions. Uncertainty surrounding the Strait of Hormuz pushed Brent crude prices up 8% week-on-week to $94 per barrel.

Domestically, petrol prices rose Rs12.35 during the week to Rs337.78 per litre, while high-speed diesel prices fell Rs19.25 to Rs364.70 per litre. The decline followed the government’s decision to cap the diesel crack spread at $41.5 per barrel versus the international margin of $68 per barrel, yielding a Rs32.63 per litre reduction.

In a key development, the Petroleum Division submitted a Rs1.49 trillion gas-sector circular debt settlement plan to the Cabinet Committee on Energy against total circular debt of Rs3.6 trillion. Key mitigation measures include Rs540 billion in dividends from OGDC, PPL, and GHPL, an additional Rs5 per litre petroleum levy, and savings from reduced LNG cargo imports.

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