Heightened tensions along the Pakistan-Afghanistan border over the weekend sent shockwaves through the Pakistan Stock Exchange (PSX) on Monday as the benchmark KSE-100 index nosedived over 4,500 points amid fears of regional instability.
Investor sentiment took a sharp hit with the index swinging between the intra-day high of 161,988 points and low of 157,678 points. At close, the index settled at 158,443.42, registering a plunge of 4,654.77 points, or 2.85%.
The market rout followed reports of deadly overnight clashes along the Pak-Afghan border, where 23 Pakistani soldiers were martyred and over 200 Afghan Taliban fighters and militants were killed.
The escalation comes at a time when the PSX was already showing signs of strain, with investors unnerved by uncertainty surrounding the International Monetary Fund (IMF) programme review and the broader economic outlook. JS Global Head of Equity Research Waqas Ghani told The Express Tribune that the stock market had lost around 9,500 points in the last six sessions, driven by weak investor sentiment amid escalating border tensions between Pakistan and Afghanistan.
"The index tumbled to the intra-day low of 5,031 points (-3.1%) over geopolitical uncertainty that triggered broad-based selling across key sectors, including banking, energy and cement, as investors remained cautious," he added.
KTrade Securities equity trader Ahmed Sheraz observed that the PSX continued to be impacted by a string of negative developments, where the KSE-100 index lost 4,655 points (-2.85%).
Market sentiment, which had already been fragile due to diminishing expectations of a policy rate cut in the upcoming meeting and heightened scrutiny from the IMF during its programme review, was further undermined by the deteriorating security situation, he said.
Additionally, a recent wave of terrorist attacks, which claimed the lives of security personnel, has shaken investor confidence. Pakistan has taken firm action against the Tehreek-e-Taliban Pakistan (TTP) across the border in Afghanistan. In Punjab, authorities launched an operation to stabilise the security situation in the wake of protests by supporters of Tehreek-e-Labbaik Pakistan.
Given the volatile security environment and the IMF review, Sheraz expected the market to remain highly sensitive in the near term. Any developments on either front are likely to significantly influence the investor behaviour.
According to Arif Habib Limited (AHL), the trading session opened with "a significant gap down", which extended the bearish spell for the KSE-100 index. Only six shares rose while 93 fell, where Unity Foods (+10%), Pakgen Power (+1.54%) and Atlas Honda (+0.59%) contributed the most to index gains. Major drags were Bank AL Habib (-5.19%), Engro Holdings (-3.32%) and Lucky Cement.
AHL mentioned that Monday's decline of 2.85% was the biggest in nearly four months following exchange of heavy gunfire between Pakistani and Afghan forces along the border as tensions between the two neighbours escalated. US President Donald Trump suggested that he was willing to step in to resolve the cross-border fighting.
Also, countrywide protests erupted after Tehreek-e-Labbaik Pakistan said its leader Saad Hussain Rizvi was shot and injured, which sparked panic selling in the market. Now, the 163,000-161,400 zone acts as a resistance, which needs to be mitigated to indicate a reversal, AHL concluded.
Topline Securities remarked that the market came under sustained pressure as bearish sentiment gripped investors throughout the session. The KSE-100 index experienced a sharp sell-off, plunging to the intra-day low of 157,678 – a steep decline of 5,420 points. Although some recovery was witnessed later in the day, the index settled at 158,443, registering a net loss of 4,655 points, or 2.85%, it said.
The downtrend was primarily driven by investor unease over escalating geopolitical tensions and a deteriorating law and order situation. These developments weighed heavily on market confidence, prompting broad-based selling, Topline said. Notable laggards included Bank AL Habib, Engro Holdings, Lucky Cement, Oil and Gas Development Company and Mari Energies, which shaved 1,261 points off the index, it added.
Overall trading volumes decreased to 1.37 billion shares compared to the previous tally of 1.40 billion. Traded value stood at Rs62.5 billion. The PSX announced on X that 65% of the total equity traded value was in Shariah-compliant stocks.
During the day, shares of 482 companies were traded. Of these, 74 stocks closed higher, 375 declined and 33 remained unchanged.
K-Electric was the volume leader with trading in 197.3 million shares, losing Rs0.28 to close at Rs6.85. It was followed by The Bank of Punjab with 97.2 million shares, falling Rs0.29 to close at Rs31.78 and WorldCall Telecom with 75.2 million shares, inching down Rs0.06 to close at Rs1.67.
Despite the widespread selling, foreign investors bought shares worth Rs617.2 million, the National Clearing Company reported.
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