KSE-100 sheds 534 points as geopolitical tensions erase early gains

KARACHI: The Pakistan Stock Exchange (PSX) witnessed a strong rally at the start of Tuesday’s session following a 100 basis points cut in the key policy rate by the State Bank of Pakistan. However, the momentum could not be sustained, and the market ended in the negative territory as escalating geopolitical tensions with India prompted investors to sell and adopt a cautious stance.

The benchmark KSE-100 index closed lower by 533.73 points, or 0.47 per cent, to 113,568.51 points, down from 114,102.24 points recorded in the last session. The highest index of the day remained at 115,093.11 points, while the lowest level was recorded at 113,418.52 points.

Analyst Ahsan Mehanti at Arif Habib Ltd said stocks closed lower as the SBP announced a cautious policy easing amid ongoing tensions with India, citing global trade tariff uncertainty and rising geopolitical risks.

Moody’s warning that sustained Pakistan-India tensions could undermine economic stability, posing risks to external financing and foreign exchange reserves amid the Kashmir crisis, also played a key role in the market's bearish close, he said.

The KSE-30 index decreased by 127.91 points or 0.37 per cent to 34,680.69 points from 34,808.6 points.

Traded shares rose by 21 million shares to 420.552 million shares from 399.538 million shares. The trading value rose to Rs23.696 billion from Rs19.852 billion. Market capital narrowed to Rs13.774 trillion against Rs13.822 trillion. Of the 453 companies active in the session, 188 closed in green, 218 in red and 47 remained unchanged.

Maaz Mulla, an analyst at Topline Securities, said the trading session opened on a buoyant note, as investor sentiment was lifted by a much-anticipated 100bps policy rate cut by the State Bank. Riding this wave of optimism, the benchmark index surged to an intraday high of 990 points. However, the early celebrations were short-lived.

As the day progressed, profit-taking emerged across key sectors, gradually eroding the morning gains. The index ultimately succumbed to selling pressure, hitting an intraday low of 683 points and closing the session at 113,568 levels, down by 533 points or 0.47 per cent.

The reversal in market trajectory was primarily driven by renewed geopolitical tensions between Pakistan and India, which unsettled investors and overshadowed the central bank’s dovish stance.

Key heavyweight stocks that provided upward support included PPL, OGDC, PSO, UBL, and SYS, which cumulatively contributed +275 points to the index. On the other hand, notable laggards such as LUCK, HMB, HUBC, EFERT, and BAHL collectively shaved -427 points, weighing heavily on overall performance.

The highest increase was recorded in PIA Holding Company Limited B, which rose by Rs528.33 to Rs5,811.59 per share, followed by Hoechst Pakistan Limited, which increased by Rs93.61 to Rs3,294.41 per share. A significant decline was noted in Unilever Pakistan Foods Limited, which fell by Rs184.26 to Rs22,815.74 per share; Nestle Pakistan Limited followed it, which closed lower by Rs172.36 to Rs7,018 per share.

Muhammad Hasan Ather, an analyst at JS Global, said the KSE-100 opened on a strong note. The rally was fuelled by the State Bank of Pakistan’s (SBP) larger-than-expected 100bps rate cut to 11 per cent, boosting investor sentiment. But later the selling pressure emerged due to geopolitical tensions. “Looking ahead, lower borrowing costs should support corporate earnings, particularly in banking, cement, and auto sectors, sustaining market optimism,” he said.

Sui South Gas remained the volume leader with 54.325 million shares, which closed lower by Rs3.95 to Rs36.08 per share. K-Electric Ltd., with 42.259 million shares, followed it, which closed higher by 22 paisas to Rs4.38 per share.

Other significant turnover stocks included Dewan Cement, Kohinoor Spining, At-Tahur Ltd, Maple Leaf, DGK Cement, WorldCall Telecom, Power Cement and Pak Refinery.

In the futures market, 333 companies recorded trading, 128 of which increased, 202 decreased, and 3 remained unchanged.