The Pakistan Stock Exchange's (PSX) benchmark KSE-100 index fell 2.4% during the outgoing week, shedding 4,045 points to close at 162,375, as escalating geopolitical tensions, rising oil prices and domestic economic uncertainty weighed on investor sentiment. The index declined for the fifth consecutive week, slipping below the key psychological levels of 166,000, 164,000 and 163,000 amid broad-based selling pressure.

On a day-on-day basis, the PSX commenced the trading week with a lacklustre session, where the KSE-100 index declined 454 points (-0.27%) to close at 165,966, slipping below the 166k level. On Tuesday, rising oil prices weighed on the PSX, which registered a negative trading session, losing 814 points (-0.49%) to 165,152.

Nevertheless, the bourse witnessed a positive session on Wednesday, finding support around 165,000, with the benchmark index gaining 779 points (+0.47%) to end trading at 165,931. However, the market lost even 164k on the second last session as geopolitical risks escalated. The KSE-100 dived 2,007 points (-1.21%) to 163,924. Geopolitical headwinds pushed the index below the 163,000 mark on the final trading day on Friday, when the market fell 1,550 points (-0.95%) to close at 162,375.

Arif Habib Limited (AHL) noted that the KSE-100 index declined 2.4% week-on-week to 162,375, shedding 4,045 points, primarily due to persistent geopolitical uncertainty. At the start of the week, Pakistan's FY26 GDP growth was revised down to 3.65% from 3.70% (FY25 revised to 3.11% from 3.18%), with quarterly growth of 3.89%, 4.31%, 4.42% and 2.0% from Q1 to Q4. Agriculture, industry and services grew 3.50%, 3.34% and 3.81%, respectively, while the economy's size reached Rs126.4 trillion ($450.4 billion), with per capita income at $1,896.

AHL mentioned that power generation in Sept'26 increased 5% year-on-year to 13,217 gigawatt hours (GWh), driven by higher hydel, local coal, imported coal and wind generation. The cost of generation rose 32% YoY to Rs9.35/kilowatt-hour due to a higher share of RLNG, high-speed diesel and furnace oil, along with elevated oil prices. Consequently, distribution companies sought a positive fuel cost adjustment of Rs2.56/kWh for Sept'26.

A committee reviewing Automotive and Auto Parts Manufacturing Policy 2026-31 proposed reforms to boost exports, accelerate New Energy Vehicle (NEV) adoption and enhance competition. Key measures included lower sales tax on NEVs, reduced import tariffs, mandatory export targets for original equipment manufacturers, localisation requirements and incentives for incremental exports.

Cotton arrivals increased 8% YoY to 4,081k bales as of October 15, 2026, led by Sindh (+7% YoY to 2,443k bales) and Punjab (+8% YoY to 1,638k bales). Sowing reached 1.79 million hectares, 82.8% of the 2.16-million-hectare target, while the government had set an FY27 production target of 9.64 million bales, compared to 7.05 million bales in FY26. Petroleum prices recorded a 3.2% WoW decline in motor spirit to Rs377.71/litre and a 1.3% WoW decline in HSD to Rs391.75/litre, driven by lower ex-refinery prices (MS: -4.5% WoW, HSD: -1.8% WoW), while the levy and margins remained unchanged, AHL said.

JS Research Head Muhammad Waqas Ghani commented that the KSE-100 index declined for the fifth consecutive week, shedding 4,045 points (-2.4% WoW) to close at 162,375, amid persistent domestic and geopolitical uncertainty. Average volumes dropped 13% to 393 million shares, while traded value inched up 7% WoW to $69.7 million. Brent crude rose further, closing the week above $114/barrel, compared with last week's average of $106.

On the macro front, Pakistan's trade deficit widened 21.1% to $9.33 billion during 1QFY27 as imports grew nearly twice as fast as exports, highlighting pressure on the external account. Large-Scale Manufacturing (LSM) posted a 0.67% growth in Aug'26, signalling a slowdown in the industrial sector. The government revised the GDP growth for FY26 slightly downwards to 3.65%. The size of the economy now stands at $450.4 billion, while per capita income hovers around $1,896.

In other news, PM Sharif approved a 1% sales tax on EVs and major import tax cuts under a five-year auto policy, subject to IMF and cabinet approval, potentially lowering vehicle prices. National Savings' profit rates were increased by an average of around 24-40 basis points across major schemes. State Bank's reserves remained stable at $21.5 billion, Ghani said.