Pakistan's stock market came under renewed pressure during the outgoing week, as escalating geopolitical tensions between the US and Iran and a sharp surge in global oil prices triggered broad-based selling, pushing the benchmark KSE-100 index down by 4.5% week-on-week (WoW) to 162,994 points.

On a day-on-day basis, the Pakistan Stock Exchange (PSX) commenced the week with a range-bound session. The KSE-100 declined by 1,175 points (-0.69%) to close at 169,497, below the psychological level of 170k. On Tuesday, the PSX extended the negative trend, shedding 1,085 points (-0.64%) at 168,412.

The selling pressure remained intact on Wednesday, when the index plunged 2,588 points (-1.54%) to end trading at 165,823. The market extended its losing streak in the last session as it settled at 162,994, down 2,830 points (-1.71%).

"The market remained volatile amid global uncertainty," noted Arif Habib Limited (AHL) in its weekly commentary. The KSE-100 index was influenced primarily by geopolitical uncertainty regarding talks between the US and Iran, and rising oil prices. As a result, the index settled at 162,994, marking a 4.5% WoW decline (-7,678 points).

The State Bank of Pakistan raised its policy rate by 100 basis points to 11.5% at the start of the week. Additionally, Pakistan re-entered the spot LNG market amid rising electricity demand, accepting a deal at $18.4/mmBtu, with the cargo expected to last 30 days at 100 mmcfd. The procurement was done to manage near-term load-shedding during peak demand.

Power-sector circular debt stood at Rs1.84 trillion as of Feb'26 vs Rs1.76 trillion in Jan'26 and Rs2.5 trillion in Feb'25. In the current fiscal year till Feb'26, the debt rose by Rs225 billion compared to an increase of Rs138 billion in the same period of last year, AHL said.

Gas production declined by 0.5% WoW to 2,947 mmcfd in the outgoing week, primarily due to lower output from Uch and Qadirpur. Oil production rose 5.2% WoW to 70,294 bpd, supported by higher output from Makori East and Baragzai.

During the week's PIB auction, the government rejected bids across all tenors, as market participants drove yields further up. Meanwhile, in the T-bill auction, yields went up by 40-80 basis points across all tenors, with majority acceptance concentrated in the one-month tenor.

The KSE-100 outlook remains dependent on geopolitical developments, with market sentiment closely tied to how long the conflict persists. Additionally, approval of the anticipated $1.2 billion tranche by the IMF executive board, scheduled for May 8, could further support market sentiment.

The KSE-100 is currently trading at a price-to-earnings ratio of 7.6x, offering a dividend yield of 6.7%. "Our top picks include OGDC, PPL, FFC, Lucky Cement, NBP, Hub Power, PSO and Attock Refinery," AHL added.

Syed Danyal Hussain of JS Global noted that the KSE-100 came under pressure again during the outgoing week, declining by 4.5% (7,678 points), as persistent geopolitical uncertainty weighed on investor confidence. International oil prices surged, with Brent crude touching a four-year high of $126/barrel (+20% WoW) amid continued disruption of the Strait of Hormuz.

In response, the Monetary Policy Committee raised the policy rate by 100 basis points to 11.50% to counter rising inflation driven by external supply shocks. The IMF executive board is scheduled to review Pakistan's third tranche under the Extended Fund Facility (EFF), alongside the second review under the Resilience and Sustainability Facility (RSF) on May 8, involving a disbursement of $1.2 billion, which the government expects to be approved as Pakistan has met most of the IMF conditions, he said.

Meanwhile, power-sector inefficiencies persisted, with circular debt swelling by Rs224 billion during 8MFY26 to Rs1.84 trillion. In the latest T-bill auction, the government raised Rs1.37 trillion, significantly exceeding the Rs650 billion target, where yields rose by 21-83 basis points across different tenors, Hussain added.



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