Market resilient despite shocks

Despite challenges arising from the US-Iran conflict, rising oil prices, increased freight and insurance costs and a global risk-off trend, Pakistan's capital market remained resilient. In this regard, the Securities and Exchange Commission of Pakistan (SECP) has released its quarterly review report for the third quarter of fiscal year 2025-26.

According to the SECP, the report covers market performance, investor activity, the debt market, economic trends, global factors and key reforms. The report noted that in the early days of the conflict, Brent crude oil prices surged by 10-13%, US software stocks declined by around 23%, the S&P 500 fell by 4.3%, MSCI Europe by 3.2%, MSCI Asia by 1.1% and MSCI Emerging Markets by 0.1%.

Against this backdrop, Pakistan's KSE-100 index declined by 14.54%. However, strong participation by domestic investors, primary market activity and regulatory reforms helped sustain market confidence. The KSE-100 stood at 174,054 points at the start of the quarter. It reached an all-time high of 191,033 on January 26, before closing at 148,743 points on March 31. The index hit a low of 144,119 on March 19, reflecting an overall decline of 22.57%.

The report mentioned that the market remained strong in January, with the KSE-100 gaining 5.81%. In February, it declined by 3.75% due to rising costs, geopolitical concerns and profit-taking. In March, losses deepened further to 11.50%. Market capitalisation dropped from Rs19.69 trillion to Rs16.53 trillion, a decrease of Rs3.15 trillion. A total of 48.8 billion shares were traded during the quarter valuing at Rs2.68 trillion. The average daily volume stood at 791.7 million shares, with an average value of Rs44.03 billion. On average, around 485 companies were traded per session, reflecting broad participation.

Domestic investors played a key role. Foreign investors sold shares worth Rs111.61 billion while local investors made net purchases of Rs111.55 billion. Companies bought shares worth Rs73.51 billion, mutual funds Rs23.78 billion and individual investors Rs20.25 billion.

Trading remained concentrated in large-cap stocks. National Bank of Pakistan led with Rs182.42 billion in traded value, followed by Pakistan Petroleum, OGDC, Fauji Fertiliser and Habib Bank. In terms of volume, K-Electric topped the list with 4.64 billion shares traded. Activity in the primary market also continued. During the quarter, three IPOs were approved. In the debt market, three government Ijarah Sukuk auctions were held with a target of Rs800 billion. Bids worth Rs2.03 trillion were received, of which the government accepted Rs811.53 billion.

According to the SECP, the quarter was highly challenging; however, the market demonstrated resilience despite pressures. Domestic investment, debt market activity, IPOs and reforms provided key support to the market.