KARACHI: Investor sentiment on the Pakistan Stock Exchange (PSX) is expected to remain hostage to Middle East geopolitical developments in the coming week, with the approaching Eid holidays likely to add to the cautious mood.
AKD Research warns that any further escalation of the Iran conflict could sustain selling pressure. Conversely, a de-escalation could trigger a meaningful recovery, given that the recent correction has pushed forward price-to-earnings to 6.6 times, a level analysts consider attractive.
Arif Habib Limited (AHL) Research notes the KSE-100 is also trading at a price-to-earnings of 7.7 times and offering a dividend yield of around 6.6 per cent, with its top picks including NBP, OGDC, PPL, FFC, LUCK, HUBC, PSO and ATRL.
The benchmark index declined 3,630 points, or 2.3 per cent, over the week to close at 153,866 points on Friday. The bourse opened on a bearish note on Monday as Brent crude surged past $119 per barrel following Iran’s deepening conflict and a halt in traffic at the Strait of Hormuz.
Oil prices later stabilised after the International Energy Agency announced the release of 400 million barrels from strategic reserves and signals emerged of easing sanctions on Russian oil following a call between US President Trump and Russian President Vladimir Putin.
The State Bank of Pakistan (SBP) held its policy rate unchanged at 10.5 per cent at its Monetary Policy Committee meeting, citing broadly stable inflation projections, which helped support investor confidence.
Muhammad Waqas Ghani, head of research at JS Global, noted that the cumulative fall from the market’s January 2026 peak of 189,167 points now stands at nearly 19 per cent. He added that as a net energy importer, Pakistan’s economy remains highly sensitive to global oil prices, with the government raising petrol and diesel prices by Rs55 per litre last weekend, a move that pushed the Sensitive Price Indicator up 1.89 per cent week-on-week(WoW).
Market participation fell sharply during the week. Average daily traded volumes dropped to 548 million shares from 791 million shares the prior week.
On the external front, the International Monetary Fund concluded its Pakistan visit for the third Extended Fund Facility review and second Resilience and Sustainability Facility review. Its end-of-mission statement noted considerable progress, though discussions will continue to assess the impact of recent global developments on Pakistan’s economy.
Worker remittances remained resilient, rising 5.0 per cent year-on-year (YoY) to $3.3 billion in February 2026, though they edged down 5.0 per cent month-on-month (MoM). Cumulative remittances for the first eight months of fiscal year 2026 rose 10 per cent YoY to $26.5 billion, according to AHL Research.
Economic data offered mixed signals. Auto sales declined month-on-month in February amid Ramadan-related slowdown and fewer working days but remained above year-ago levels. Petroleum product sales increased 13 per cent year-on-year to 1.28 million tons in February, though they declined 15 per cent month-on-month.
Pakistan raised $507 million through a 5G spectrum auction. Roshan Digital Account inflows rose 12 per cent MoM and 19 per cent YoY to $242 million in February.
SBP-held foreign exchange reserves rose $41 million WoW to $16.34 billion as of March 6, 2026. The Pakistani rupee remained largely stable, edging up 0.03 per cent to 279.31 against the US dollar. Pakistan’s trade deficit stood at US$3 billion in February, with exports at $2.3 billion and imports at $5.3 billion.
Sector performance was uneven. Refineries, leasing companies and jute were among the top performers, gaining 5.0 per cent, 4.9 per cent and 3.7 per cent respectively week-on-week. Woollen textiles, paper and board, and transport were the worst performers, declining 8 per cent, 6.8 per cent and 6.7 per cent respectively. Among individual stocks, AICL gained 10.1 per cent, LOTCHEM rose 9.0 per cent, HINOON added 7.1 per cent, PGLC climbed 6.7 per cent and YOUW advanced 6.2 per cent.
On the downside, SAZEW fell 13.6 per cent, FCCL declined 10.6 per cent, MUREB and GHNI each dropped 10.5 per cent and DGKC lost 9.3 per cent.
Foreign investors and companies were the main net sellers for the week, offloading $13.4 million and $16.5 million respectively. Individuals and banks absorbed most of the selling, with net purchases of $10.8 million and $11.7 million respectively.
