Pakistan’s benchmark KSE-100 index declined 0.6 per cent week-on-week, losing 1,066 points to close at 167,089 as geopolitical tensions, rising oil prices and domestic economic concerns overshadowed the positive impact of a staff-level agreement with the International Monetary Fund (IMF).
According to Arif Habib Limited (AHL), investor sentiment remained under pressure amid escalating risks to key shipping routes, with Yemen’s Houthis widening their targets to include Saudi Arabia’s civilian infrastructure and energy facilities. Ukrainian drone attacks on Russian oil refineries and concerns over US energy supplies also kept Brent crude prices above $100 per barrel, according to AKD Securities Limited.
Some support came from the staff-level agreement covering the fourth review of the Extended Fund Facility (EFF) and the third review of the Resilience and Sustainability Facility (RSF). The agreement could unlock $1.2 billion in disbursements under the two programmes, subject to approval by the IMF Executive Board, taking cumulative disbursements to approximately $5.7 billion.
However, concerns about the widening trade deficit, inflationary pressures and the future direction of interest rates continued to dampen market confidence.
According to AHL, the government raised Rs381 billion against a target of Rs350 billion in its latest Pakistan Investment Bonds (PIBs) auction.
Cut-off yields on three-, five- and 10-year bonds increased by 26 to 41 basis points, while the yield on two-year bonds declined by 19 basis points. Bids for 15-year bonds were rejected.
The increase in yields strengthened market expectations of a possible policy rate hike at the upcoming monetary policy announcement.
Meanwhile, the State Bank of Pakistan’s foreign exchange reserves increased by $15 million to $21.5 billion as of October 2. The rupee recorded a marginal gain of 0.03 per cent, closing at Rs277 against the US dollar.
Central government debt reached Rs82.95 trillion at the end of August, representing a 7.1 per cent increase year-on-year but a 0.5 per cent decline from the previous month.
Banking stocks exerted the greatest downward pressure on the benchmark index, contributing a loss of 566 points. Fertiliser companies followed with 234 points, while automobile assemblers, cement companies and textile composite firms shed 97, 75 and 43 points, respectively.
Habib Bank Limited, MCB Bank and United Bank Limited were the largest individual negative contributors, collectively dragging the index down by 388 points. Fatima Fertiliser and Fauji Fertiliser Company also weighed on market performance.
In contrast, oil marketing companies provided the strongest support, contributing 110 points, followed by power companies with 36 points.
Pakistan State Oil was the leading individual positive contributor, adding 113 points. Hub Power Company, Pakistan Oilfields, Engro Holdings and Mari Energies also helped limit the market’s losses.
Trading activity weakened during the week, with average daily volumes declining 18.6 per cent week-on-week to 427 million shares. Average daily traded value fell 2 per cent to $67 million.
Cement dispatches increased 6 per cent year-on-year to 4.62 million tonnes in September, supported by a 7 per cent rise in domestic sales, while exports remained unchanged.
During the first quarter of fiscal year 2027, total cement dispatches grew 4 per cent to 13.14 million tonnes. Domestic sales increased 8 per cent, offsetting an 11 per cent decline in exports.
The banking sector also recorded growth, with deposits rising 14 per cent year-on-year to Rs39.2 trillion at the end of August, according to AKD Securities. Meanwhile, cotton arrivals increased 5 per cent to 3.2 million bales during September.
Pakistan’s oil production fell 6.4 per cent week-on-week to 63,700 barrels per day, while gas output decreased 1.4 per cent to 2,999 million cubic feet per day.
The declines were primarily attributed to lower production from northern oilfields and the Mari, Sui and Sharf fields.
Petrol prices rose 2.1 per cent to Rs398.96 per litre, while high-speed diesel prices declined 0.9 per cent to Rs395.72 per litre.
Separately, Sindh Engro Coal Mining Company is expanding its Thar Block-II mine to provide additional coal supplies to Lucky Electric Power Company. The expansion could facilitate a complete shift to locally sourced coal, reducing dependence on imported fuel.
Analysts expect quarterly corporate earnings announcements and geopolitical developments to remain key drivers of market sentiment in the coming weeks.
The KSE-100 index was trading at a price-to-earnings ratio of 7.5 times, with a dividend yield of 6.7 per cent.
They noted that easing inflation, improving economic indicators and a potential de-escalation of tensions in the Middle East could bring oil prices down and strengthen the case for monetary easing.
However, continued geopolitical uncertainty, elevated energy prices and concerns over domestic economic conditions could restrict further gains in the stock market.
