KSE-100 Index Slides Below 170,000 Amid Geopolitical Tensions and Thin Liquidity

KARACHI:

The benchmark KSE-100 index dropped 2,610 points, or 1.5%, during the past trading week at the Pakistan Stock Exchange (PSX), weighed down by geopolitical uncertainty, elevated oil prices, and stalled progress in US-Iran negotiations, which left investors on high alert.

The benchmark index stayed under pressure for the entire week, slipping below the critical 170,000 level on the back of muted participation. Average daily traded volume decreased 22% week-on-week to 525 million shares, while the total traded value fell 17% to Rs18.7 billion.

Investor confidence took another hit from a widening trade deficit and rising Treasury bill yields, even though September inflation cooled to approximately 10.3%, down from 11.1% in August.

Trading began with mixed activity on Monday, the week’s opening day, as the KSE-100 dipped 340 points (-0.20%) to settle at 170,426. Tuesday proved lacklustre, with the benchmark falling 825 points (-0.48%) to close at 169,600, breaking through the psychological 170,000 mark for the first time in seven sessions. Geopolitical risks capped sentiment on Wednesday as the KSE-100 gained 369 points (+0.22%) to 169,969, ending September’26 just short of the milestone. Thursday brought volatility and predominantly negative trading, resulting in a sharp 1,332-point decline (-0.78%) to 168,636. The bourse wrapped up the week with subdued momentum, down 481 points (-0.29%) to close at 168,155.

Arif Habib Limited (AHL) reported that the KSE-100 finished the week at 168,155 points, down 1.5% week-on-week (-2,610 points), noting that geopolitical instability and the Saudi Arabia-Yemen Houthi conflict dampened optimism for successful negotiations. Among key economic data, Pakistan’s crude and POL imports surged 21% year-on-year in August’26, fueled by a 55% rise in crude oil imports, while domestic crude production grew by 7%. In the latest T-bills auction, the government raised Rs880 billion in total, with yields climbing across all tenors by 49.5 to 75 basis points. Most of the funding was raised in the three-month tenor, totaling Rs480 billion.

For September’26, tax collection by the Federal Board of Revenue (FBR) improved 9% year-on-year to Rs1,344 billion, Rs1 billion above its target of Rs1,343 billion. This brought the quarterly collection to Rs3,066 billion, a 7% increase compared to last year and Rs13 billion above the FBR’s target. The Consumer Price Index (CPI) for September’26 stood at 10.3% year-on-year, compared to 11.1% in August’26, according to AHL.

Pakistan’s liquid foreign exchange reserves as of October 1 were $26.8 billion. State Bank-held reserves accounted for $21.4 billion, up $38.9 million, equating to an import cover of 3.04 months. The government raised National Savings profit rates effective October’26 by 3 to 19 basis points, with the largest increase of 19 basis points allocated to Defence Saving Certificates.

Overall refinery supplies jumped 32% year-on-year to 1,084 thousand tons in September’26, driven by strong growth in MS, HSD, and FO segments. On a month-on-month basis, upliftment improved by 12.5%. OMC sales decreased 2% year-on-year in September’26 to 1.35 million tons amid higher fuel prices, though they rose 7% month-on-month. The Pakistani rupee appreciated marginally by 0.03%, closing at Rs277.07 per USD. “Going forward, market direction will once again remain contingent on geopolitical developments, and the ongoing talks between government of Pakistan and the IMF,” AHL said. Its top picks include OGDC, PPL, FFC, LUCK, MLCF, NBP, PSO, DGKC, ENGROH, AKBL, and NPL.

KSE-100 profitability hit an all-time high of Rs2,031 billion ($7.3 billion) in FY26, an 18% year-on-year increase. Banks and exploration and production (E&P) companies were the main contributors to this overall profitability.

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