Macroeconomic uncertainty continued to weigh on the Pakistan Stock Exchange (PSX) on Tuesday as the market remained volatile after the State Bank of Pakistan (SBP), contrary to expectations, left its policy rate unchanged at 10.5%.

In the morning, trading commenced on a positive note and following a brief dip the benchmark index touched the intra-day peak at 189,521 in the first hour of trading. However, the optimism proved short-lived as selling pressure pulled the market down, wiping out all the early gains. The KSE-100 index slid to the intra-day low of 187,538 towards the close of trading. It recouped some of the losses and eventually settled at 188,203, down 384.80 points, or 0.20%.

Arif Habib Limited Deputy Head of Trading Ali Najib noted that the PSX experienced a largely uneventful session as the KSE-100 traded sideways and closed at 188,203, down 385 points. The market lacked clear direction as investors continued to digest the SBP’s surprise “no-change” policy decision a day earlier, leading to cautious trading across most sectors, he said. Investor sentiment was also impacted by the Constitutional Court’s ruling, which upheld Section 4B of the income tax law, reaffirming parliament’s authority to levy income tax and declaring the earlier high court decisions related to super tax partially invalid, which added a layer of uncertainty for select corporates, Najib mentioned.

Additionally, he said, the SBP’s active presence in the foreign exchange market remained in focus. The central bank conducted net forex interventions amounting to $10.8 billion between June 2024 and October 2025, with $1.03 billion purchased in October alone, to ensure external stability. On the corporate side, Sazgar Engineering announced 2QFY26 results, posting earnings per share (EPS) of Rs66.56, up 67% year-on-year but down 9% quarter-on-quarter, falling short of street expectations of Rs73-78. The company also declared a dividend of Rs15 per share.

JS Global analyst Nawaz Ali remarked that volatile activity was witnessed at the PSX as investors opted to book profits at higher levels and adopted a cautious stance amid geopolitical tensions. The KSE-100 index fluctuated between the intra-day high of 189,521 (+933 points) and low of 187,538 (-1,049 points) before closing with a marginal decline of 385 points at 188,203.

Despite attractive valuations, the fragile situation in the Middle East continued to keep investors on the back foot. In that environment, Ali asked investors to focus on fundamentally strong stocks and take advantage of dips.

KTrade Securities commented that the PSX closed marginally lower at 188,203, down 385 points. The session remained largely range bound, reflecting cautious investor sentiment. Selling pressure emerged following the SBP’s decision to keep the policy rate unchanged, which prompted profit-taking, particularly in cyclical stocks. However, there came some positivity after the central bank reduced capital requirements for banks, resulting in strength across the banking sector, it said. Meanwhile, the results season continued to influence investor behaviour, which kept overall market trend mixed.

Fauji Fertiliser led gains during the day, supported by Meezan Bank, Pakistan Petroleum, Systems Limited and Bank Alfalah. Conversely, Engro Holdings, Engro Fertilisers, Hub Power, Lucky Cement, MCB Bank and Maple Leaf Cement dragged the index lower, the report added. KTrade expects futures rollover activity and tensions between Iran and the US may continue to cap the upside in the near term.

Topline Securities mentioned that trading remained volatile, with the index oscillating between the intra-day high of 189,521 and low of 187,538. Fauji Fertiliser Co, Meezan Bank, PPL, Systems Ltd and Bank Alfalah contributed 949 points to the index while Engro Holdings, Engro Fertilisers and Hubco offset gains, erasing 637 points, it added.

Overall trading volumes decreased to 749.2 million shares versus Monday’s total of 870.4 million. The value of shares traded during the day was Rs53 billion.

Shares of 486 companies were traded, where 160 stocks rose, 278 fell and 48 remained unchanged.

K-Electric was the volume leader with trading in 90.2 million shares, gaining Rs0.07 to close at Rs7.04. It was followed by Hascol Petroleum with 47.9 million shares, rising Rs0.51 to close at Rs25.49. Foreign investors bought shares worth Rs531.6 million, the National Clearing Company reported.