Pakistan’s stock market witnessed choppy trading during the week ended February 6 as the benchmark KSE-100 index closed largely flat amid mixed macroeconomic signals, external uncertainties and domestic security concerns.

Inflation inched up slightly, trade deficit widened on a cumulative basis despite record monthly exports, while foreign exchange reserves posted a modest increase, reflecting a cautiously stable macroeconomic backdrop.

On a day-on-day basis, the Pakistan Stock Exchange (PSX) commenced the week on a positive note, with the KSE-100 index advancing 883 points (+0.48%) to close at 185,058. On Tuesday, the bourse extended its positive momentum, gaining 1,843 points (+1%) to settle at 186,900.

The market maintained its upward trajectory on Wednesday as the index rose 931 points (+0.50%) to 187,832. However, the PSX came under heavy selling pressure on Friday after a break on Thursday on account of Kashmir Solidarity Day, with the KSE-100 tumbling 3,703 points (-1.97%) to close at 184,130.

Arif Habib Limited’s (AHL) weekly commentary noted that the KSE-100 remained positive for most of the week before giving up gains towards the close, ending at 184,130, marginally lower by 45 points (-0.02% week-on-week).

Inflation edged up slightly as the Consumer Price Index (CPI) clocked in at 5.8% year-on-year (YoY) in January, compared to 5.6% in December. According to PBS data, Pakistan posted a trade deficit of $2.7 billion in Jan’26. Exports rose to $3.1 billion, up 3.7% YoY and a sharp 35% month-on-month (MoM), marking the highest-ever monthly goods exports. Imports stood at $5.8 billion, down 1.4% YoY and 4.9% MoM. On a cumulative basis, the trade deficit for 7MFY26 widened to $22 billion, reflecting a 28.2% YoY increase, AHL said.

Petroleum sales rose 12% MoM to 1.52 million tons in Jan’26 (+10% YoY), driven by lower motor spirit (MS) and high-speed diesel (HSD) prices, recovery in automobile sales, higher tractor sales under the Green Tractor Scheme, and reduced smuggling. MS offtake went up 2% MoM, HSD surged 20% MoM, while furnace oil (FO) volumes jumped 76% MoM due to lower hydel generation. Cumulatively, 7MFY26 petroleum offtake reached 9.67 million tons (+3% YoY).

Refinery sales rose 11% YoY in Jan’26, led by higher MS and HSD offtake. HSD supplies increased 16% YoY to 511k tons, while FO production declined 6.2% YoY, with most volumes likely exported at a loss despite improved local demand. During 7MFY26, refinery throughput stood at 6.2 million tons (+10.6% YoY).

Fertiliser offtake remained weak in Jan’26 following front-loaded Rabi season demand and significant discounts in prior months. Urea offtake fell 52% YoY to 214k tons, while DAP sales declined 37% YoY and 52% MoM to 39k tons, impacted by higher international prices and seasonal demand slowdown. SBP-held reserves increased by $56.1 million to $16.16 billion, AHL added.

In its report, JS Global observed that the KSE-100 index experienced a volatile week amid heightened US-Iran tensions and domestic security concerns, ultimately closing largely flat WoW at 184,130 points. On the macro front, Pakistan’s CPI for Jan’26 clocked in at 5.8%, keeping the real interest rate at 4.7% and taking the 7MFY26 average inflation to 5.24%.

Meanwhile, the country posted a trade deficit of $2.7 billion during Jan’26, down 6.6% YoY, driven by a 3.7% rise in exports and a 1.4% decline in imports. On the external financing front, the UAE rolled over a $2 billion loan for one month at a financing rate of 6.5%, allowing room for further discussions on the facility’s tenor and financing rate. Separately, Pakistan requested Saudi Arabia for a two-year extension in its $1.2 billion oil financing facility, JS mentioned.

In another development, Pakistan lost its comparative advantage versus India as the US lowered Indian tariffs from 50% to 18%, which was likely to be detrimental to Pakistan’s textile exports. Lastly, in the latest T-bill auction, the government raised Rs823 billion against the target of Rs650 billion, with yields increasing up to 39 basis points across different tenors, it said.