The equity market came under heavy selling pressure on Monday as surging oil prices and rising bond yields fueled concerns over imported inflation and external account stress in Pakistan.
The benchmark KSE-100 Index at the Pakistan Stock Exchange showed high volatility, touching an intraday high of 151,813.61 (up 106 points) before plunging to a low of 144,656.97, marking a sharp decline of over 7,000 points (4.65%) from the previous close of 151,707.51.
Market participants attributed the downturn to escalating geopolitical tensions in the Middle East and their potential impact on global trade and industrial activity. Ahsan Mehanti of Arif Habib Commodities noted that investor sentiment remained weak due to fears of rising interest rates, higher crude oil prices, and pressure on the external account.
Oil Surge and Global Concerns
Oil prices surged as the regional conflict entered its fifth week, raising fears of supply disruptions. Yemen’s Houthi forces reportedly launched missiles and drones targeting sites in Israel, heightening concerns over instability in key shipping routes like the Red Sea and the Strait of Hormuz.
Amid these risks, Saudi Arabia rerouted a significant portion of its oil exports via the Red Sea. Brent crude prices surged to nearly $117 per barrel, adding further pressure on energy-importing economies like Pakistan.
Global Market Reaction
The uncertainty also impacted global equities, with major Asian markets declining following losses on Wall Street. Investor risk appetite weakened as geopolitical tensions escalated.
Adding to concerns, Donald Trump made remarks about potential action against Iran’s oil infrastructure, while Iranian officials warned of possible military escalation.
Foreign Outflows Intensify
Foreign investment flows remained under strain. Data from the State Bank of Pakistan showed:
- $177.9 million withdrawn from Treasury Bills (T-bills) by March 19
- $21 million sold from Pakistan Investment Bonds (PIBs)
- $148.7 million withdrawn from equity markets
Overall, foreign investors pulled out around $348 million from Pakistani financial markets, reflecting a broader shift away from emerging markets amid rising global risks.
Inflation Pressures Rise
On the domestic front, inflation continued to climb. The Pakistan Bureau of Statistics reported that the Sensitive Price Indicator (SPI) increased by 0.97% for the week ending March 26, reaching 345.45 points, with a year-on-year rise of 8.24%.
Previous Session Performance
The bearish trend follows losses in the previous session as well, where the KSE-100 Index declined by 1,200 points (0.79%), closing at 151,707.52.
Outlook
Analysts believe the market will remain sensitive to developments in the Middle East, global oil prices, and foreign investment trends. Continued volatility is expected as investors navigate geopolitical uncertainty and economic pressures.
