KP emergency drags the PSX down 1,965 points

The Pakistan Stock Exchange (PSX) began the week with a heavy fall on Monday as the imposition of governor’s rule and emergency in Khyber Pakhtunkhwa added to worries over the Middle East war, high oil prices and inflation.

The benchmark KSE-100 index shed 1,964.87 points, or 1.18 percent, to close at 165,124.41, after falling as much as 1,920 points during the day, The Express Tribune and Dawn reported. It slipped below the 166,000 level.

Broad-based selling

Selling swept through oil marketing companies, car assemblers, cement makers, power producers, commercial banks and oil and gas exploration companies.

United Bank, Oil and Gas Development Company, Habib Bank, Meezan Bank and Lucky Cement were the biggest drags, together taking about 645 points off the index, Dawn reported.

The day in numbers:

• Volume: 363 million shares, up from 309.4 million on Friday
• Value: Rs14.5 billion
• Breadth: of 500 companies traded, 135 rose, 322 fell and 43 were unchanged
• Volume leader: Treet Corp, with 27.3 million shares, gaining Rs0.37 to Rs24.09
• Foreign investors: net buyers of Rs11.6 million, the National Clearing Company said

Why investors sold

Topline Securities said the bearish mood followed the federal government’s decision to impose emergency in KP after President Asif Ali Zardari approved the cabinet’s recommendation on Sunday, prompting investors to turn cautious.

Oil prices rose to near two-week highs as attacks on Saudi Arabia overshadowed hopes of more supply, Dawn reported. Brent crude rose $2.07, or 2 percent, to $106.79 a barrel, its highest since September 29. Even a staff-level agreement with the IMF that paved the way for $1.2 billion, subject to board approval, had failed to lift the market in recent days.

KTrade head of research Fawad Basir told The Express Tribune that June 2026 corporate results had been better than expected, but higher commodity prices were keeping inflation high and could influence this month’s monetary policy decision. The exchange rate and interest rates remained key concerns amid the Middle East crisis and the IMF review, he said.

What comes next

“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 said.

Ali Najib, deputy head of trading at Arif Habib Limited, said value buying at lower levels gave brief support, but the recovery was short-lived. “Further downside pressure cannot be ruled out, although value buying at lower levels may provide intermittent support,” he said, advising investors to stay selective, focus on fundamentally strong stocks and avoid aggressive positions until sentiment settles.

Why it matters

The market had already been weighed down by the war and high oil prices. Political uncertainty in KP has added a fresh worry. Analysts say the direction now depends on oil, the Middle East and how calm returns at home. Read our reports on the IMF staff-level agreement and on the market’s last slide over political tensions.

This article draws on reporting by The Express Tribune and Dawn.