The Pakistan Stock Exchange (PSX) witnessed a significant decline on Thursday, the first trading day of Ramadan 2026, as continuous foreign selling and disappointing corporate earnings weighed on investor confidence. Thinner market participation due to the holiday also contributed to slower trading activity compared to the previous session’s sharp rebound.
Market Performance
The KSE-100 Index, the benchmark of Pakistan’s bourse, traded between a high of 179,279.74 points (up 426.65 points, or 0.24%) and a low of 175,101.97 points (down 3,751.12 points, or -2.1%) against Wednesday’s close of 178,853.09. Overall, the market fell by 2.1%, reflecting investor caution amid profit-taking and external pressures.
Mohammed Sohail, CEO of Topline Securities, attributed the decline to “continuous foreign selling and weak corporate results,” while independent analyst AAH Soomro noted that the thin trading volume on the first day of Ramadan amplified the market’s downward movement. “The sharp rise yesterday prompted profit-taking today, and further movements will depend on upcoming corporate results,” he added.
Foreign Investment Trends
Foreign direct investment (FDI) remained subdued in July 2025–January 2026 (7MFY26), falling 41% year-on-year to $981.4 million, according to State Bank of Pakistan (SBP) data. Net FDI for January stood at $173 million, reversing a $135 million net outflow in December. Cross-border investments declined 25.5% compared to last year, with China remaining the largest investor, though its net investment decreased to $495.5 million from $857.1 million in the same period last year.
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Sector-wise, power attracted $541.8 million compared to $890.3 million last year, while telecoms saw outflows of $442.7 million against $79.6 million previously. Financial businesses fared better, drawing $460 million, slightly up from $432.4 million.
Government Borrowing and Economic Indicators
In the Treasury bills auction held on Wednesday, the government raised Rs651 billion (realised value), with mixed yields: the one-month T-bill eased 5 bps to 10.1482%, while three-month, six-month, and 12-month instruments increased to 10.2853%, 10.4437%, and 10.5996%, respectively. The auction saw participation of Rs1.265 trillion, exceeding the Rs450 billion target.
Inflation in January edged up slightly to 5.8% from 5.6% in December, while the SBP maintained its benchmark policy rate at 10.5%, aiming to balance economic stability with growth.
Outlook
Investors remain cautious as Pakistan’s stock market reacts to global capital flows, corporate earnings, and macroeconomic indicators. While Wednesday saw a sharp rebound of 5,702.68 points (3.29%), Thursday’s decline highlights the market’s sensitivity to external and domestic pressures, with Ramadan trading expected to remain subdued.
