KARACHI: The Pakistan Stock Exchange (PSX) remained under pressure during the outgoing week as escalating tensions in the Middle East unsettled investors and fuelled concerns over the global economic outlook, particularly for oil-importing countries dependent on supplies through the Strait of Hormuz.
The benchmark KSE-100 index fell 3.5 per cent, or 6,439 points, week-on-week to close at 175,803, as investors reduced exposure amid heightened geopolitical uncertainty.
According to Arif Habib Ltd (AHL), fears of a wider conflict between the US and Iran kept international crude oil prices elevated, dampening investor sentiment.
The market suffered steep losses at the start of the week, plunging 2,315 points on Monday and another 6,408 points on Tuesday. Sentiment briefly improved after US President Donald Trump withdrew a proposed 20pc transit fee on vessels passing through the Strait of Hormuz, but renewed geopolitical concerns erased the recovery later in the week.
KSE-100 index tumbled to 175,803 on nervous selling amid economic uncertainty
Major macroeconomic developments included net foreign direct investment (FDI) falling 94pc month-on-month to $14 million in June from $214m in May. The current account swung to a deficit of $649m in June after posting a surplus of $500m a month earlier, while the real effective exchange rate rose to 106.44 from 106.08.
Car sales continued to recover, increasing 29pc month-on-month and 4pc year-on-year to 22,741 units in June. During FY26, cumulative sales rose 33pc to 206,000 units.
Large-scale manufacturing output declined 1pc year-on-year in May but increased 1.2pc from the previous month. During the first 11 months of FY26, the sector expanded 5.8pc year-on-year.
Trade data remained mixed. Pakistan’s trade deficit widened 62.4pc year-on-year to $4.7 billion in June as exports fell 9.1pc to $2.3bn while imports surged 29.4pc to $6.9bn. For FY26, the cumulative trade deficit increased 22pc to $39.6bn, according to Topline Securities Ltd.
In contrast, information technology exports reached a record $4.6bn during FY26, up 21pc year-on-year, accounting for 46pc of total services exports.
The State Bank’s foreign exchange reserves fell by $1.245bn to $17.23bn due to external debt repayments, while the country’s total liquid foreign exchange reserves declined to $23bn. The rupee, however, remained largely stable, appreciating marginally by 0.03pc over the week to close at Rs277.96 against the US dollar.
Oil production increased 2pc week-on-week to 71,579 barrels per day, while gas production fell 1.3pc to 3,058 million cubic feet per day, mainly due to disruptions at the Shewa field following damage to an SNGPL pipeline.
Auto financing continued to improve, rising 38pc year-on-year to Rs382bn in June, supported by lower borrowing costs.
Banking stocks accounted for the largest drag on the benchmark index, shaving off 1,946 points, followed by exploration and production companies (990 points), cement (809 points), fertiliser (425 points) and power (381 points). United Bank Ltd, Pakistan Petroleum Ltd, Oil and Gas Development Company Ltd, Lucky Cement and Hub Power were the biggest individual laggards, while Pioneer Cement, Cnergyico and TPL REIT Fund-I recorded modest gains.
Average daily trading volume fell 31pc week-on-week to 740 million shares, while average traded value declined 28pc to $124m.
Mutual funds emerged as the largest sellers, offloading equities worth $28m during the week. Individuals and foreign corporates were net buyers, purchasing shares worth $9.9m and $9.2m, respectively.
AKD Securities said the market remained under pressure as fears of disruption to regional energy supplies pushed crude oil prices above $86 per barrel, triggering heavy selling during the first two trading sessions. Although comments from the US administration indicating willingness to pursue negotiations helped limit losses, investor confidence remained fragile.
The brokerage noted that Pakistan’s current account recorded a deficit of $139m in FY26 compared with a surplus of $1.8bn in the previous year, while net FDI declined 34pc to $1.6bn. On the positive side, auto sales increased 33pc during FY26 and IT exports reached a record high.
Analysts expect market direction in the coming weeks to depend largely on geopolitical developments and the trajectory of international oil prices. They also expect the ongoing corporate earnings season to influence investor sentiment.
The KSE-100 index is currently trading at a price-to-earnings ratio of around eight times, with an estimated dividend yield of more than 6pc, suggesting valuations remain attractive despite recent volatility.
Published in Dawn, July 19th, 2026
