Key Points
- Market weighed by geopolitical risk, foreign selling and cautious sentiment
- Trading volumes declined during the week
- Sharp mid-week rebound offset by heavy late-session selling
- Analysts see selective value emerging at lower levels
ISLAMABAD: Bearish sentiment prevailed on the Pakistani stock market during the volatile week ending Friday last. Investors secured positions ahead of the weekend due to rising geopolitical tensions and a cautious macroeconomic outlook.
The Pakistan Stock Exchange (PSX) faced selling pressure and profit-taking, forcing the benchmark KSE-100 Index to shed 6,434 points, or 3.6 per cent week-on-week, to close at 173,170 points. According to market pundits, investors navigated geopolitical tensions, foreign outflows and broad-based profit-taking.
Early week weakness
The week opened on a weak footing as selling pressure intensified across heavyweight sectors, dragging the index lower in early sessions. Foreign and institutional investors were also reported as net sellers. That allowed the bears to tighten their grip on the shares changing hands in Pakistan. Still, some analysts did not call it a bearish market and preferred the term technical correction for the overbought market.
Mid-Week Rebound
Although the market staged a strong rebound mid-week, gaining more than 5,700 points in a single session on renewed buying interest, the recovery proved short-lived. A fresh wave of geopolitical concerns triggered another wave of risk-off sentiment and a selling spree.
Late-week sell-off
Thursday saw one of the sharpest single-day declines in recent sessions, with the benchmark shedding nearly 6,700 points amid heightened global uncertainty and a spike in international crude oil prices.
The market partially recovered on Friday, adding close to 1,000 points, but the overall weekly trajectory remained negative.
Sectoral Performance
Sector-wise, automobile assemblers, cement, commercial banks, fertiliser, oil and gas exploration companies and refineries remained under pressure. Heavyweight banking and energy stocks accounted for a significant portion of the benchmark’s decline as institutional investors trimmed positions.
Trading Activity
Trading activity softened compared with the previous week, with average daily volumes declining by more than 20 per cent, reflecting cautious participation from both local and foreign investors.
Foreign investors remained net sellers during the week, though local individuals and banks absorbed part of the selling pressure.
Analyst commentary
Brokerage houses described the week’s downturn as a technical correction following strong gains earlier in the quarter.
Analysts noted that persistent foreign selling and external geopolitical risks dampened investor appetite. Underlying macroeconomic indicators, including external account stability and ongoing structural reforms, remain supportive of a bullish rally.
Market strategists observed that the index is approaching key technical support levels between 170,000 and 166,000 points, which could encourage value-based buying.
They maintained that valuations in select blue-chip stocks have become increasingly attractive for medium- to long-term investors.
Regional markets
Regional markets in India, Bangladesh and Sri Lanka witnessed mixed performance, with benchmark indices showing moderate gains despite global volatility. In India, the BSE Sensex advanced 1.2 per cent amid strong corporate earnings, while Bangladesh’s DSEX gained 0.9%. Meanwhile, Sri Lanka’s CSE index fell 0.5 per cent due to political uncertainty and currency pressures.
Global context
Globally, US and European markets experienced modest declines due to concerns about higher oil prices and central bank policy signals, which influenced investor risk appetite in emerging markets, including Pakistan.
Outlook
Looking ahead, analysts expect consolidation in the near term as investors monitor global developments, foreign fund flows and domestic macroeconomic indicators. Sustained stability in the external account and continuity of reforms are likely to remain critical drivers for market direction in the coming weeks.
