The Pakistan Stock Exchange closed October lower, with the benchmark KSE-100 index down 3,560 points, or 2.1 per cent, at 166,409, according to Arif Habib Ltd. Persistent Middle East tensions and domestic political uncertainty after emergency and governor’s rule in Khyber Pakhtunkhwa weighed on confidence, alongside broader economic worries.
Topline Securities Ltd linked the monthly decline to geopolitical uncertainty, foreign portfolio outflows, profit-taking in heavyweight stocks and cautious sentiment amid global market volatility and domestic macroeconomic concerns. Average daily trading volume in October rose 27 per cent month-on-month to 600 million shares, while traded value increased 19 per cent to Rs23 billion.
Late-week rebound, still a red month
Despite the monthly loss, the market recovered late in October. AKD Securities Ltd said the KSE-100 gained 4,034 points, or 2.5 per cent, in the outgoing week, with average daily traded volume surging 121 per cent to 1.095 billion shares. Renewed diplomatic efforts around the US-Iran conflict, including reported US outreach and Pakistan-proposed talks in Tehran involving Makkah Pact states and Iran, supported that bounce, as did better-than-expected corporate earnings.
Oil stayed firm: supply worries after Houthi attacks on Saudi Arabia and tanker incidents near the Strait of Hormuz helped push Brent crude up 0.7 per cent week-on-week to $117.10 a barrel on Friday. Petroleum prices under the daily pricing mechanism also moved higher, with high-speed diesel up Rs8.9 to Rs400 a litre and petrol up 85 paise to Rs377.9 a litre week-on-week.
Banks, fertiliser, cement, investment banks and exploration and production names led weekly gains. Fauji Fertiliser Company, MCB Bank, Engro Holdings, United Bank and Oil and Gas Development Company were among the largest positive contributors. Earnings of firms representing 96 per cent of the KSE-100’s weight rose 26 per cent year-on-year to Rs1.638 trillion in the first nine months of calendar year 2026. Arif Habib Ltd put the index’s price-to-earnings ratio at 7.1 times, with a dividend yield of 7 per cent.
Rates, inflation and the wider economy
On 26 October the State Bank of Pakistan (SBP), the country’s central bank, raised its policy rate by 50 basis points to 12 per cent—the first increase since April—citing higher energy prices, geopolitical uncertainty and the inflation outlook. Consumer price index inflation slowed to 10.26 per cent in September from 11.15 per cent in August, but stayed well above 5.76 per cent in September 2025. The Finance Division projected October inflation at 9.5–10.5 per cent.
Power generation rose 5 per cent year-on-year to 13,217 GWh in September, yet generation costs jumped 32 per cent to Rs9.35 per kilowatt-hour, prompting distribution companies (Discos) to seek a positive fuel cost adjustment of Rs2.56 per unit. The current account deficit widened to $356 million in September from $73 million in August. Automobile sales fell 12 per cent year-on-year and 3 per cent month-on-month to 15,104 units, the Pakistan Automotive Manufacturers Association said.
On 8 October, Pakistan and the International Monetary Fund (IMF)—the global lender backing Pakistan’s programme—reached a staff-level agreement on the fourth review of the $7 billion Extended Fund Facility and the third review of the $1.4 billion Resilience and Sustainability Facility, clearing a path for $1.21 billion subject to executive board approval. Liquid foreign exchange reserves stood at $26.8 billion as of 23 October ($21.5 billion with the SBP and $5.2 billion with banks). The SBP raised reserve projections to $23 billion by December and $25 billion by June 2027, and lifted its FY27 remittances forecast to $45 billion from $44 billion. In the fixed-income market, the government raised Rs1.8 trillion through treasury bills against a Rs1.7 trillion target, with cut-off yields up 25–61 basis points across tenors.
Analysts expect sentiment to stay sensitive to US-Iran developments and international oil prices.
Timeline: what has happened so far
- 8 October 2026: Pakistan and the IMF reach a staff-level agreement on the EFF and RSF reviews, paving the way for $1.21 billion pending board approval.
- 23 October 2026: Liquid foreign reserves stand at $26.8 billion; SBP holdings rise $33 million in the week while banks’ holdings fall $112 million.
- 26 October 2026: The SBP raises the policy rate by 50 basis points to 12 per cent, the first hike since April.
- Late October week: The KSE-100 gains 4,034 points (2.5 per cent); Brent settles at $117.10; diesel and petrol rise under daily pricing.
- October close: The KSE-100 finishes the month at 166,409, down 3,560 points (2.1 per cent).
Aasan alfaaz mein
October mein Pakistan Stock Exchange kamzor rahi aur KSE-100 index 3,560 points gir gaya. Middle East ki tanao, KP ki siyasi soorat-e-haal aur State Bank ka rate barhana investors ke liye risk bana. Hafte ke akhir mein market thori sambhal gayi, lekin petrol-diesel mehnga hona aur bijli ka possible fuel charge gharili kharchon par asar daal sakta hai. Aage bhi oil prices aur US-Iran khabrein market ka mood badal sakti hain.
