Karachi: The KSE-100 Index experienced significant pressure over the past week, dropping by 4,526 points or 2.5% amid cautious investor sentiment. The decline is attributed to rising political tensions and security concerns in Balochistan, which have created uncertainty surrounding the Reko Diq mining project.

According to JS Global, the macroeconomic landscape is also under watch, with an IMF review mission expected later this month to discuss the third review under the $7 billion Extended Fund Facility (EFF). Pakistan has so far met three out of five conditions. Additionally, remittances for January 2026 increased by 15.4% year-on-year to $3.46 billion, bringing the total inflows for the first seven months of the fiscal year to $23.2 billion, an 11% increase compared to the previous year.

In the latest MSCI review, Pakistan saw two additions and two deletions in the MSCI Frontier Markets and MSCI Small Cap indices, which will take effect on February 27. On the fiscal side, Public Sector Development Program spending reached approximately Rs273 billion in the first seven months of the fiscal year, reflecting only 27% utilization of the FY26 allocation of Rs1 trillion. The Finance Division reported a primary surplus of Rs4.1 trillion for the first half of FY26, equivalent to 3.2% of GDP.

Sectorally, Moody's has revised the outlook for Pakistan's banking sector to stable from positive, indicating a gradual recovery. Meanwhile, automobile sales for four-wheelers surged by 38% year-on-year to approximately 23,000 units in January 2026, marking a 43-month high and contributing to a 43% year-on-year growth in the first seven months of FY26. The State Bank of Pakistan's reserves remained stable week-on-week at $16.2 billion.