Karachi: The KSE-100 Index experienced a sharp decline this week as geopolitical tensions in the region exerted pressure on the market, leading to a drop of 10,566 points, or 6.3%, week-on-week. This downturn follows last week's decline of 5,108 points, marking a cumulative fall of nearly 17% from the index's peak in January 2026. The market has been marked by volatility as investors reduce exposure amid ongoing regional and domestic security concerns.

According to JS Global, the market sentiment remains cautious ahead of key macroeconomic developments, with an International Monetary Fund (IMF) mission currently in discussions with Pakistani authorities for the third review of the program. The Pakistan Bureau of Statistics reported a year-on-year inflation rate of 7% for February 2026, the highest since October 2024. It is expected that the State Bank of Pakistan will maintain the policy rate at 10.5% in its upcoming meeting, despite rising global oil prices that could exacerbate inflationary pressures.

In response to a potential gas shortfall, Pakistan is exploring options after QatarEnergy halted LNG production following attacks from Iran. Meanwhile, Saudi Arabia has assured continued oil supplies to Pakistan through the Port of Yanbu on the Red Sea to help meet energy demands. The government is also considering a shift from a fortnightly to a weekly revision of petroleum prices, with potential increases in motor spirit and high-speed diesel prices. Additionally, during this week's treasury bill auction, the government raised Rs555 billion, with cut-off yields rising between 21 and 39 basis points across various tenors. The State Bank of Pakistan's reserves were reported at US$16.3 billion.