PSX below 170k on weak sentiment

The KSE-100 index fell 2,610 points, or 1.5%, during the outgoing week at the Pakistan Stock Exchange (PSX) as geopolitical uncertainty, elevated oil prices and the lack of progress on US-Iran negotiations kept investors cautious.

The benchmark index remained under pressure throughout the week, slipping below the key 170,000 level amid subdued participation. Average daily traded volume declined 22% week-on-week to 525 million shares, while traded value fell 17% to Rs18.7 billion.

Investor sentiment was further dented by a widening trade deficit and higher T-bill yields, although September inflation eased to around 10.3% from 11.1% in August.

On a day-on-day basis, Monday, the first trading day, saw mixed activities, when the KSE-100 slid 340 points (-0.20%) to settle at 170,426. Tuesday was a lacklustre day, with the benchmark index sliding 825 points (-0.48%) to close at 169,600 by breaching the key psychological level of 170k after a gap of seven trading sessions.

Geopolitics tempered sentiment around 170k on Wednesday as the KSE-100 gained 369 points (+0.22%) at 169,969, just below the psychological level of 170k, thereby ending Sept'26 below the milestone. On Thursday, the market endured a volatile and predominantly negative session, resulting in a 1,332-point decline (-0.78%) at 168,636. The bourse culminated the trading week with subdued momentum, declining 481 points (-0.29%) to close at 168,155.

Arif Habib Limited (AHL) noted that the KSE-100 closed at 168,155 points, down 1.5% week-on-week (-2,610 points), as geopolitical uncertainty and the conflict between Saudi Arabia and Yemen's Houthis dampened hopes of successful negotiations. Among major economic data, Pakistan's crude/POL imports surged 21% year-on-year in Aug'26, driven by a 55% increase in crude oil imports. Meanwhile, local crude production increased 7%. In the latest T-bills' auction, the government raised a total of Rs880 billion, with yields rising for all tenors, in the range of 49.5 to 75 basis points. The majority amount was raised in the three-month tenor, amounting to Rs480 billion.

For Sept'26, tax collection by the FBR improved 9% YoY to Rs1,344 billion, which was Rs1 billion above the target of Rs1,343 billion. This took the quarterly collection to Rs3,066 billion, marking an increase of 7% compared to last year and Rs13 billion above the FBR's target. The Consumer Price Index (CPI) for Sept'26 clocked in at 10.3% YoY compared to 11.1% in Aug'26, AHL said.

Pakistan's liquid foreign exchange reserves position as of October 1 stood at $26.8 billion. Of these, the State Bank-held reserves were $21.4 billion, up $38.9 million, translating into an import cover of 3.04 months. The government increased the National Savings profit rates, effective from Oct'26, by 3 to 19 basis points, with the largest increase of 19 basis points for the Defence Saving Certificates.

Overall refinery supplies surged 32% YoY to 1,084k tons in Sept'26, driven by strong growth across MS, HSD and FO. On a MoM basis, the upliftment improved by 12.5%. OMC sales declined 2% YoY in Sept'26 to 1.35 million tons, amid higher fuel prices. On a MoM basis, OMC sales increased 7%. The Pakistani rupee appreciated marginally by 0.03%, closing at Rs277.07/USD. "Going forward, market direction will once again remain contingent on geopolitical developments, and the ongoing talks between government of Pakistan and the IMF," AHL said. Our top picks include OGDC, PPL, FFC, LUCK, MLCF, NBP, PSO, DGKC, ENGROH, AKBL and NPL.

KSE-100 profitability reached an all-time high of Rs2,031 billion ($7.3 billion) in FY26, reflecting an 18% YoY increase. Banks and E&Ps were the major contributors to the overall profitability.