Key Points
- Pakistan’s benchmark share index posts a weekly decline after recent record highs
- Energy stocks lead losses amid global oil price swings
- Banking and cyclical sectors trade cautiously ahead of earnings and policy cues
- Mixed macroeconomic signals fail to sustain buying interest
- Regional and global volatility shapes investor sentiment
ISLAMABAD: Pakistan’s stock market retreated last week after scaling record levels in recent sessions, as investors moved to lock in gains and reassess risk amid both domestic political developments and an uncertain global backdrop.
The benchmark KSE-100 Index at the Pakistan Stock Exchange ended the week in negative territory, snapping its upward momentum after a strong rally that had lifted valuations across several sectors.
The index declined by 4,525.85 points, or 2.46 per cent, during the week ended February 13, closing at 179,603.73 compared with 184,129.58 in the preceding week. The drop marked one of the sharpest weekly pullbacks in recent months, following the index’s surge to historic highs above the 189,000 level in late January.
Market participants described the downturn as a corrective phase, driven largely by profit-taking in heavyweight stocks rather than a fundamental shift in economic outlook.
Pakistan’s Broad market performance
The week opened on a cautious note, with selling pressure intensifying midweek. On Thursday alone, the index shed more than 2,500 points in a single session as heavyweight stocks came under pressure.
Friday extended losses, with the market closing down 908.91 points for the day after touching an intraday low of 178,237.13.
Trading volumes remained moderate compared with the heightened activity seen during the rally phase. Analysts said the absence of aggressive dip-buying suggested investors preferred to wait for clearer economic and political signals before rebuilding positions.
Sectoral dynamics
The energy sector emerged as the principal drag on the market. Oil and gas exploration companies and refinery stocks faced sustained selling amid fluctuations in international crude prices and uncertainty surrounding domestic solar pricing policies.
Global oil markets have remained volatile due to shifting supply expectations and geopolitical tensions, factors that often ripple through emerging-market equities, such as those of Pakistan.
Banking shares traded in a mixed range. Although the sector has benefited from high interest rates and relatively strong profitability in recent quarters, investors showed caution ahead of corporate earnings announcements and signals on the future direction of monetary policy.
Expectations regarding interest rate adjustments have become a central theme for equity valuations.
Cyclical sectors, including cement, steel, and construction-linked stocks, saw selective buying on dips.
Some investors view these industries as potential beneficiaries of infrastructure spending and economic stabilisation efforts. However, gains in these segments were insufficient to offset declines in larger index constituents.
Macroeconomic landscape
On the economic front, the picture remained mixed. Recent data indicating resilient remittance inflows and signs of fiscal consolidation offered some reassurance regarding external stability. Inflation trends have shown gradual moderation, fuelling speculation about possible monetary easing later in the year if conditions permit.
Nevertheless, political noise and policy uncertainty weighed on short-term confidence. Investors continued to monitor developments related to structural reforms, external financing arrangements, and foreign exchange reserves, all of which are critical to sustaining macroeconomic stability.
Regional and international markets
Pakistan’s market performance unfolded amid volatility in regional and global equities. Major Asian markets experienced choppy trading as investors reacted to shifting signals from the United States Federal Reserve and concerns about global growth momentum.
Emerging markets more broadly have experienced intermittent capital outflows due to currency pressures and fluctuating risk appetite factors.
Global commodity trends also influenced sentiment. Movements in oil prices, coupled with fluctuations in the US dollar, shaped investor perceptions of Pakistan’s external account outlook. Any sustained rise in energy prices could impact import costs and inflation dynamics, adding another layer of complexity for policymakers and market participants alike.
Outlook
Analysts expect the market to remain range-bound in the near term as it digests recent gains and awaits clearer cues on earnings, interest rates, and policy continuity. The current pullback is widely viewed as a consolidation after an extended rally rather than the beginning of a prolonged downturn.
If macroeconomic indicators continue to stabilise and corporate results meet expectations, selective buying in fundamentally strong stocks may re-emerge.
For now, however, caution prevails as investors balance domestic developments with an evolving global landscape.
