Pakistan Stock Exchange (PSX) endured a bruising start to the week on Monday as political upheaval in Khyber-Pakhtunkhwa (K-P) and mounting geopolitical anxiety kept investors on edge, driving the benchmark index deep into the red.

The KSE-100 index remained volatile throughout the session and shed 1,964.87 points, or 1.18%, to settle at 165,124.41 at the close of trading. The imposition of governor's rule and emergency measures in parts of K-P, followed by reports of police crackdown, added to political clamour, stoking fears of further unrest. Selling pressure swept through oil marketing companies, automobile assemblers, cement firms, power producers, commercial banks and oil and gas exploration companies, reflecting the broad-based weakness in market sentiment.

In the international market, oil prices eased on expectations of increased Russian supplies after US President Donald Trump said Ukraine and Russia had agreed to halt attacks on each other's energy facilities following a US diesel supply deal with Moscow. However, the relief was tempered by fears of a wider regional conflict after a Houthi attack on Riyadh's international airport, leaving investors wary amid an already unsettled geopolitical landscape.

Talking to The Express Tribune, KTrade Head of Research Fawad Basir attributed the market's weakness to geopolitical uncertainty and heightened tensions in K-P. He said while June 2026 corporate results in the listed space were better than expected, higher commodity prices were keeping inflation elevated despite the base effect, potentially influencing this month's monetary policy decision. At the same time, exchange rate parity and interest rates remained key concerns amid the Middle East crisis and the IMF programme review, Basir added.

In its report, KTrade mentioned that selling pressure was broad-based across commercial banks, oil and gas, cement and technology stocks. Oil and Gas Development Company, Habib Bank, Meezan Bank and Lucky Cement were among the major laggards.

"Going forward, market direction is likely to remain volatile, hinging on geopolitical developments and oil prices, with sustained easing in crude prices and progress in US-Iran engagement potentially supporting equities, while further regional escalation could extend the bearish trend," KTrade forecast.

Arif Habib Limited Deputy Head of Trading Ali Najib observed that the market opened on a negative note amid heightened domestic political uncertainty. Value buying at lower levels offered brief support to the benchmark index, but the recovery proved short-lived, with the bourse closing firmly in negative territory. "Going forward, the market is likely to remain volatile amid political uncertainty and cautious investor sentiment. Further downside pressure cannot be ruled out, although value buying at lower levels may provide intermittent support," he said. Najib advised investors to remain selective, prioritise fundamentally strong stocks and avoid aggressive positions until sentiment stabilised.

Topline Securities said that the KSE-100 index came under renewed selling pressure, closing at 165,124, down 1,965 points (-1.18%). The bearish sentiment followed the federal government's decision to impose emergency in K-P, after President Asif Ali Zardari approved the federal cabinet's recommendation on Sunday. The development heightened political uncertainty, prompting investors to adopt a cautious stance amid concerns over the evolving situation.

Overall trading volumes increased to 363 million shares compared with Friday's tally of 309.4 million. The value of shares traded during the day stood at Rs14.5 billion.

In the ready market, shares of 500 companies were traded. Of these, 135 stocks closed higher, 322 fell and 43 remained unchanged.

Treet Corp was the volume leader with trading in 27.3 million shares, gaining Rs0.37 to close at Rs24.09. Foreign investors bought shares worth Rs11.6 million, the National Clearing Company reported.