Pakistan Stock Market Faces Seventh Week of Decline Amid Geopolitical Tensions and IMF Uncertainty

Karachi, Pakistan – The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 index continued its downward trend, marking its seventh consecutive week of losses as of March 15, 2026. The decline is attributed to a combination of escalating geopolitical tensions, delays in securing a crucial funding agreement with the International Monetary Fund (IMF), and concerns over the country’s economic outlook.

KSE-100 Index Performance

The KSE-100 index closed the week at 153,866.16 points, a 0.36% decrease from the previous session and a 2.3% drop for the week, representing a loss of 3,630 points . Trading volume decreased to 303,016,592 shares, with a value of PKR 14,690,560,352 .

Key Factors Contributing to the Decline

• Geopolitical Tensions: The market reacted negatively to reports of escalating tensions in the Middle East, specifically what was described as “illegal US-Israel aggression on Iran” and the potential closure of the Strait of Hormuz .
• IMF Agreement Delay: Continued delays in finalizing a Staff-Level Agreement (SLA) with the IMF for the third review of Pakistan’s $7 billion Extended Fund Facility (EFF) have created uncertainty about the country’s fiscal stability .
• Oil Price Volatility: A surge in global oil prices initially contributed to the market’s decline, though the market stabilized somewhat following announcements of strategic reserve releases and speculation regarding Russian oil sanctions .
• Monetary Policy: The State Bank of Pakistan’s (SBP) decision to maintain the policy rate at 10.5% signaled caution amid the volatile global environment .

Sector Performance

Sector performance was mixed. Refinery, leasing companies, and jute sectors showed gains, increasing by 5%, 4.9%, and 3.7% respectively. Conversely, the woollen, paper, and transport sectors experienced losses, declining by 8%, 6.8%, and 6.7% respectively .

Stock Highlights

Top-performing stocks included AICL, Lotte Chemical Pakistan, and Highnoon Laboratories, with week-on-week gains of 10.1%, 9%, and 7.1% respectively. Sazgar Engineering Works, Fauji Cement, and Murree Brewery experienced significant losses, declining by 13.6%, 10.6%, and 10.5% respectively .

Economic Indicators

• Remittances: Remittances in February increased by 5% year-on-year to $3.3 billion .
• Trade Deficit: The trade deficit stood at $3 billion in February, with exports at $2.3 billion (a decrease of 8.5% year-on-year) and imports slightly down by 0.4% .
• Petroleum Sales: Petroleum sales rose by 13% year-on-year in February, driven by increased demand for petrol and high-speed diesel .
• Auto Sales: Auto sales increased by 42% year-on-year in February but decreased by 26% month-on-month due to seasonal factors .
• Foreign Exchange Reserves: The SBP’s foreign exchange reserves increased by $41 million to $16.3 billion .

Market Outlook

Analysts at AKD Securities suggest the market’s future performance hinges on developments in the Middle East conflict and the government’s efforts to address energy conservation and resolve the IMF review . A de-escalation of regional tensions could potentially spur a market recovery, given the current appealing valuations, with the KSE-100 index’s forward price-to-earnings ratio at 6.6x .

As of March 15, 2026, the KSE100 was trading at 153866.16 points .