PSX Benchmark Index Down 0.68%WoW
Pakistan Stock Exchange (PSX) witnessed persistent volatility during the week, mainly shaped by Middle-East conflict and resulting fluctuations in international oil prices. The benchmark index registered erosion of 1,033 points or 0.68%WoW to close at 151,708 on Friday, March 27, 2026.
Week began on a positive note, supported by emerging de-escalation efforts with Pakistan acting as a mediator; however, gains were eroded in last two trading sessions as conflicting statements from the United States and Iran heightened uncertainty.
On the domestic macro front, cut-off yields in Thursday’s PIB auction increased by 90-225bps, with 5-year paper yield rising to 12.5%.
Moreover, Barrick Mining Corp extended the review period of Reko Diq by 12 months in light of ongoing Middle East conflict and escalation of domestic security issues. The aforesaid developments weighed on Bank and E&P sectors.
IMF shared MEFP draft with Pakistan, marking progress towards SLA for third review.
Amid the ongoing energy situation, GoP reduced the PSDP allocation by PKR100 billion to accommodate fuel subsidies, to maintain domestic petroleum prices in last two reviews, with an estimated two-week cost of PKR69 billion.
Market participation rebounded post-Ramadan, with average daily traded volumes surging to 872 million shares from 418 million shares in prior week.
Foreign exchange reserves held by State Bank of Pakistan (SBP) increased by US$22 million to US$16.4 billion as of March 18, 2026.
Other major news flow during the week included: 1) Pakistan secures petroleum cargoes till April 25, 2) Foreign assistance inflows were up 18.35%YoY to US$5.862 billion during 8 months of current financial years 3) NEPRA okays competitive bidding for power supply, and 4) Domestic cotton prices jump sharply amid Middle East crisis.
Top performing sector of the week were Technology, Inv. Banks, and Cements while laggards included Refinery, Power, and E&P.
Major selling was recorded by Insurance and Banks with a net sell of US$12.5 million and US$6.8 million, respectively. Individuals absorbed most of the selling with a net buy of US$20.0 million.
Top performing scrips of the week were: SYS, PGLC, INIL, BNWM, and PIBTL, while laggards included: KTML, SSGC, KEL, SAZEW, and GAL.
Going forward, market sentiment will hinge on developments of the Middle East conflict. At the same time, investor focus will remain on the government’s energy conservation measures, diversification of fuel imports, and progress on the IMF review.
According to AKD Securities, over the medium term, any de-escalation in the conflict could spark a strong market rebound, as recent corrections have made valuations more attractive, with forward P/E now at 6.4x.
The benchmark index of PSX has fallen sharply as sentiment took a hit to a low of 144,119 points, fall by 23,943 points during March 2026, owing to factors that include: 1) escalation of US-Israel war on Iran, 2) closure of the Strait of Hormuz – hitting 20% of world oil and LNG supply; 3) Damage to critical energy infrastructure in the Middle East due to the ongoing war; 4) surge in international crude prices (Arab light price up 79% CY26 to date due to supply constraints, heightening fears of higher inflation; 5) abrupt hike in domestic fuel prices and announcement of austerity measures; 6) potential risks to Pakistan’s external position; and 7) little outcome of mediation efforts to date.
US-Israel war on Iran seems to be turning into a full fledge war as the US bombed critical military, civilian and energy infrastructure in Iran including its nuclear sites, along with the assassination of Iran’s top military and civilian leadership i.e. Supreme Leader, Security Chief etc.
In retaliation, Iran has been conducting missile and drone strikes at Israel and US military and commercial assets in the region as well as energy and other infrastructure like Airports etc. in regional countries like the UAE, Saudi Arabia, Kuwait, Qatar, Bahrain and Oman.
Additionally, Iran has closed the Strait of Hormuz responsible for 20% of global oil and LNG supply, resulting in a sharp hike in global energy prices putting economies at high risk.
The benchmark index declined by 11.5%MoM and market participation weakened, with average daily traded value falling 32%MoM to US$130 million (ready plus futures), reflecting a sharp pull-back in risk appetite amid rising macroeconomic concerns.
The correction was largely driven by escalating geopolitical tensions following the US-Iran conflict which – alongside disruption of the Strait of Hormuz and energy chains in the region – pushed global oil prices higher, reignited concerns over higher CPI prints, interest rates, external and fiscal accounts.
Foreign corporates remained sellers – US$72 million primarily in Banks and Cements while local Banks and Individuals provided partial support cumulative buy of US$95 million.
Additional pressures form border tensions with Afghanistan, elevated secondary market yields and uncertainty around the Reko Diq project further weighed on market sentiments, overshadowing the recently announced staff level agreement with the IMF.
Looking ahead, market direction is likely to remain sensitive to global oil prices, incoming macroeconomic prints and the IMF’s detailed country report.
Geopolitical developments remained the primary driver of the market’s direction during the month, with supply disruptions and infrastructure damage across the GCC, coupled with closure of the Strait of Hormuz, constraining a material portion of hydrocarbon supply. Resultantly, benchmark crude prices surged with Arab Light and Oman/Dubai Crude prices averaging US$108/ bbl and US$107/ bbl, respectively, while peaking near US$135/ bbl during the month.
On the local front, the government’s decision to delay the pass-through of higher fuel costs raised concerns of fiscal slippage, while deferring upside risks to inflation. Expectations of higher inflation readings and potential shift towards tighter monetary policy conditions continue to weigh on investor sentiment. That said, a potential improvement in diplomatic engagements between both the US and Iran may provide much needed near-term relief.
Looking ahead, market direction is likely to remain highly sensitive to global oil prices, incoming macroeconomic data and details of the IMF’s country report. With expectations of eventual fuel price rationalization, the pass through of global oil prices into CPI appears to be inevitable.