RECORDER REVIEW

KARACHI: The Pakistan Stock Exchange experienced pronounced volatility during the week, with the benchmark index moving within a narrow overall range despite substantial fluctuations in investor sentiment.

Persistent geopolitical friction between the United States and Iran, renewed concerns over regional energy supplies and a sharp increase in international and domestic oil prices kept investors cautious during the week ended September 18, 2026, limiting the upside in equities as the benchmark KSE-100 Index edged up only 372.73 points, or 0.22 percent week-on-week, to 170,884.59 points.

The Business Recorder benchmark indices also reflected the week’s volatility. The BRIndex100 closed at 18,781.90 points. Its total turnover during the week stood at 1.717 billion shares. The BRIndex30, meanwhile, ended the week at 68,278.52 points. Its total turnover amounted to 865.773 million shares.

The market’s performance was primarily shaped by developments in the international energy and geopolitical environment. Throughout the week, equities remained sensitive to disruptions in global energy markets as clashes between Houthi insurgents and Saudi Arabia intensified in the region.

International Brent crude prices responded sharply to the heightened tensions, rising to a peak of US$109 per barrel before retreating temporarily and settling around US$103 per barrel. The movement in crude prices remained a major factor for Pakistan’s equity market because of the direct implications of higher international energy costs for domestic fuel prices, inflationary pressures and the country’s external account.

The surge in international oil prices quickly fed into Pakistan’s domestic petroleum market. The federal government announced fresh upward revisions in retail fuel prices, with motor gasoline, commonly referred to as petrol, increasing by Rs19.99 per litre week-on-week to Rs390.79 per litre. High-Speed Diesel (HSD) prices increased even more sharply, rising by Rs26.88 per litre to Rs424.92 per litre.

The latest weekly increases came on top of the already elevated fuel-price environment and represented another factor limiting the scope for a stronger recovery in equities. Higher fuel costs have broad implications for economic activity and corporate expenses, while the magnitude of the increase kept investors focused on the potential impact of elevated energy prices on the wider economy.

Despite these pressures, the domestic monetary policy environment remained unchanged. The State Bank of Pakistan’s Monetary Policy Committee convened during the week and decided to keep the key policy rate unchanged at 11.5 percent. According to the market assessment, the decision reflected the central bank’s view that broader macroeconomic indicators remained aligned with official forecasts.

The unchanged policy rate provided continuity to the monetary policy framework at a time when the equity market was simultaneously dealing with higher global oil prices and geopolitical uncertainty.

Pakistan’s external account indicators, meanwhile, showed improvement in the period under review. The country’s monthly current account deficit narrowed by a substantial 78 percent year-on-year in August 2026 to USD98 million. The reduction represented a significant improvement from earlier levels and was primarily facilitated by a substantially lower national import bill and reduced primary income outflows, which collectively offset weaker export revenues.

For the first two months of fiscal year 2027, the current account deficit also contracted substantially. The cumulative deficit declined by 36 percent year-on-year to US$543 million. Analysts say the improvement in the external current account provided a positive macroeconomic development at a time when higher international oil prices were simultaneously creating additional pressure on the country’s import costs.

Industrial activity also recorded some growth during July 2026. Large-Scale Manufacturing (LSM), an important indicator of industrial output, increased 3 percent year-on-year, while showing a stronger 9.5 percent month-on-month rebound. The monthly improvement indicated a significant recovery in industrial activity compared with the preceding month.

Pakistan was also working to strengthen its medium-term external-sector buffers. Islamabad is negotiating an extension of its major bilateral currency swap facility with China, which is scheduled to expire in 2027. At the same time, the government is awaiting formal feedback from the United States on a proposed USD10 billion Exchange Stabilisation Facility.

Foreign exchange reserves held directly by the State Bank of Pakistan also reached a historic high during the week. SBP-held reserves surged to USD21.4 billion. The increase was largely supported by the successful realization of USD3 billion, generated through Eurobond issuances.

The market’s trading activity during the week was heavily concentrated in several key sectors. Technology and Communication emerged as the largest contributor to total market turnover, accounting for 22 percent of overall market volume. The Refinery sector followed with 15 percent, while Power Generation and Distribution, Commercial Banks and Investment Banks each accounted for 6 percent of weekly volume. All other sectors collectively represented the remaining 44 percent of total market volume.

Sector performance, however, was mixed despite the overall benchmark’s marginal increase. Pharmaceutical sector posted the strongest sectoral performance, gaining 1.2 percent week-on-week. Exploration and production stocks advanced 0.8 percent, while OMCs sector increased 0.4 percent.

Individual stock performance was similarly mixed, with several companies recording substantial gains despite the largely range-bound benchmark. Pakistan Services Limited emerged as the leading gainer among the highlighted KSE-100 stocks, surging 18.9 percent week-on-week to Rs1,293.09.

Ibrahim Fibres Limited followed, advancing 15.4 percent to Rs285.06. Citi Pharma Limited increased 6.0 percent to Rs75.38, while GlaxoSmithKline Pakistan Limited rose 4.9 percent to Rs320.99. Bannu Woollen Mills Limited gained 4.8 percent to Rs65.97, while Pakistan Petroleum Limited advanced 4.5 percent to Rs228.80.

Heavy selling pressure, however, affected several other KSE-100 constituents. Ghani Global Holdings Limited emerged among the leading decliners, falling 9.3 percent week-on-week to Rs1,081.24. Ghandhara Automobiles Limited declined 8.6 percent to Rs543.38, while National Bank of Pakistan dropped 5.5 percent to Rs170.55.

Pakistan Telecommunication Company Limited declined 4.9 percent to Rs62.80, while Pakistan Aluminium Beverage Cans Limited fell 4.7 percent to Rs92.62. Colgate-Palmolive Pakistan Limited lost 4.3 percent to Rs1,127.30, and Sazgar Engineering Works Limited declined 4.1 percent to Rs1,745.20.

Overall market activity contracted significantly compared with the preceding week, reflecting the cautious stance of investors. Total market capitalisation, however, recorded a marginal 0.1 percent increase, rising from Rs19.015 trillion to Rs19.038 trillion. In US dollar terms, market capitalisation increased from USD68.57 billion to US$68.67 billion, representing a 0.1 percent increase.

Readyboard activity contracted sharply. Average daily turnover in the Readyboard spot market declined 29.2 percent week-on-week to 452.25 million shares, compared with 639.13 million shares in the previous week.

The decline was also visible in value terms. Readyboard average daily traded value fell 23.1 percent to Rs20.77 billion, compared with Rs27.00 billion previously. In US dollar terms, average daily Readyboard turnover declined to US$74.92 million from US$97.34 million, also representing a 23.1 percent reduction.

Overall, the week ended September 18 produced a market outcome that was almost unchanged in aggregate but characterised by considerable volatility beneath the headline index.