Karachi: The KSE-100 Index experienced a tumultuous week as geopolitical tensions weighed heavily on the market, but a late surge on Friday offered some respite. The index fell to 156,732 points earlier in the week amid strained relations following unsuccessful talks between Pakistan and Afghanistan on cross-border militancy in Istanbul. However, a mutual agreement to maintain a ceasefire and further discussions scheduled for November 6 helped the index recover some losses, closing 1% lower on a week-over-week basis.

On the economic front, the State Bank of Pakistan decided to maintain the policy rate at 11%, aligning with its medium-term inflation target of 5 to 7%. Meanwhile, the International Monetary Fund is anticipated to review the approval of a US$1.2 billion tranche during its board meeting in December 2025.

The World Bank adjusted its GDP growth projection for Pakistan to 3%, down from 3.4%, attributing the revision to inflationary risks exacerbated by recent floods. In a boost to Pakistan's external position, Saudi Arabia committed to extending a US$1 billion oil financing facility while rolling over US$5 billion in deposits.

The Pakistani Rupee strengthened to a six-month high, closing at Rs280.91 against the US dollar on Friday. On the fiscal side, the government reported a rare federal surplus of Rs1.5 trillion in the first quarter of fiscal year 2026, contrasting with a Rs649 billion deficit in the same period last year.

In the latest Treasury bills auction, the government raised Rs1,134 billion, surpassing its target of Rs950 billion. The yields on the 1-month and 12-month T-bills moved by -11 basis points and +10 basis points, respectively. Meanwhile, the State Bank of Pakistan's foreign exchange reserves remained stable at US$14.5 billion.