The Pakistan Stock Exchange (PSX) remained under pressure during the outgoing week as renewed uncertainty surrounding the US-Iran conflict and elevated global oil prices weighed on investor sentiment.
The benchmark KSE-100 Index declined by 2,610 points, or 1.5% week-on-week, to close at 168,155 points.
Market activity also weakened during the week, with average daily traded volume (ADTV) falling 45% WoW to 647 million shares.
Global Oil Prices Keep Pressure on Market
International energy prices remained elevated for much of the week, with oil touching $105.3 per barrel.
Supply-chain concerns and China’s suspension of oil product exports outweighed the recovery in Gulf crude flows, keeping energy prices under pressure.
Brent crude later declined to $99.5 per barrel toward the end of the week as the United States increased pressure on European countries to release diesel stocks.
The movement in international oil prices remained an important factor for Pakistan’s equity market given the potential implications for the country’s import bill, inflation and corporate profitability.
Domestic Fuel Prices Show Mixed Movement
Domestic fuel prices also moved in different directions during the week.
High-speed diesel (HSD) declined by Rs12.8 per litre, or 3.1% WoW, to Rs399 per litre.
Meanwhile, motor spirit (MS) increased by Rs1.4 per litre, or 0.35% WoW, to Rs391 per litre.
The contrasting movements came as international energy markets remained volatile.
Inflation Slows to 10.3%
On the macroeconomic front, Pakistan’s inflation rate eased to 10.3% year-on-year in September 2026 from 11.2% in August.
The decline was attributed to disinflationary pressure from food prices.
However, the country’s trade deficit widened by 6% YoY in September to $3.6 billion, highlighting continued pressure on the external account.
IMF Review Remains Key Economic Development
The International Monetary Fund (IMF) formally began policy discussions in Islamabad for Pakistan’s fourth review under the Extended Fund Facility (EFF) and the third review under the Resilience and Sustainability Facility (RSF).
The reviews are linked to potential combined disbursements of $1.2 billion.
The IMF discussions are being closely monitored by investors because progress on the programme could influence expectations around Pakistan’s external financing position, fiscal reforms and broader macroeconomic stability.
FBR Revenue Exceeds IMF Target
The Federal Board of Revenue (FBR) collected Rs3.1 trillion during the first quarter of FY27.
According to the research note, the collection exceeded the IMF-agreed target by Rs13 billion.
The revenue performance comes as the government continues to focus on improving tax mobilisation and meeting fiscal commitments under the IMF programme.
SBP Raises Rs853 Billion Through T-Bill Auction
On the monetary side, the State Bank of Pakistan (SBP) raised Rs853 billion through a Treasury bill auction.
Cut-off yields increased by 61 basis points for three-month papers, 75 basis points for six-month papers and 45 basis points for 12-month papers.
The movement in yields reflects changing conditions in Pakistan’s fixed-income market and remains relevant for investors assessing monetary and liquidity conditions.
Other Major Developments During the Week
Several other developments also shaped market sentiment during the week.
The Finance Minister discussed potential US Export-Import Bank financing for Boeing aircraft, refinery upgrades and the Reko Diq project.
Meanwhile, SBP foreign exchange reserves stood at $21.4 billion as of September 25, increasing by $39 million WoW.
The central bank’s net foreign exchange interventions stood at $841 million in June 2026, while purchases during FY26 reached $8.1 billion.
The government also raised Rs46 billion through fixed-rate Hybrid Sukuk and Rs72 billion through variable-rate Hybrid Sukuk.
In the energy sector, the government plans to procure at least 25 to 26 LNG cargoes to meet winter gas demand.
Sector Performance Remains Mixed
Sector-wise, Vanaspati and Allied Industries recorded the strongest weekly performance, gaining 10.7%.
Synthetic and Rayon stocks increased 2.9%, while Modarabas gained 2.3%.
On the other hand, the Power sector declined 2.1%, followed by Investment Companies and Paper and Board, which each fell 1.9%.
The mixed sector performance reflected differing sensitivities to oil prices, interest rates, domestic demand and broader macroeconomic conditions.
Companies and Individuals Lead Buying
Investor flows also showed divergent positioning during the week.
Companies and individuals were the largest net buyers, recording net purchases of $5.2 million and $4.5 million, respectively.
Mutual funds recorded the largest net selling at $6.1 million, while brokers recorded net selling of $2.3 million.
Top Performing and Lagging Stocks
Among individual companies, SSOM was the strongest performer, gaining 13.6% WoW.
BML increased 4.1%, while ATRL rose 3.8%.
The biggest declines were recorded by PSEL, which fell 12.0%, followed by FHAM with a 10.9% decline and NPL with a 9.4% decline.
Market Outlook and Valuation
The research note expects market conditions to improve alongside strengthening economic indicators, while identifying the upcoming IMF review as an important near-term catalyst.
It also points to the possibility that a US-Iran agreement could ease international oil prices from currently elevated levels.
The note says the market is trading at a forward price-to-earnings ratio of 7.2x. The research house forecasts the KSE-100 Index at 263,800 points by December 2026.
The projection is a research-house forecast rather than an established outcome, and its realisation would depend on developments including the IMF review, global oil prices, domestic economic conditions, liquidity and geopolitical risks.
The research note’s listed preferred stocks include OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP and SYS.
Key Factors to Watch
Investors will continue to monitor several factors in the coming weeks, including:
- Progress on the IMF’s fourth EFF and third RSF reviews
- International oil prices and developments involving the US and Iran
- Pakistan’s inflation and trade balance
- FBR tax collections and fiscal performance
- SBP monetary and foreign-exchange developments
- Winter LNG procurement and energy-sector conditions
- Foreign and domestic investor flows at the PSX
These factors are likely to remain important in determining market sentiment as Pakistan moves through the second quarter of FY27.