Karachi: The Pakistan Stock Exchange (PSX) experienced a significant downturn in the first quarter of the fiscal year 2027, with the KSE-100 Index declining by 10,332 points, or a significant move of 5.7% year-to-date. As of September 30, 2026, the index closed at 169,969 points, reflecting a reversal from the strong gains recorded in the previous fiscal year. The market's decline was attributed to a combination of escalating geopolitical tensions, particularly between the United States and Iran, and uncertainties surrounding the reopening of the Strait of Hormuz.
According to information available from the Pakistan Stock Exchange (PSX), the geopolitical uncertainty intensified after the US-Iran Memorandum of Understanding expired in August without an extension. This situation, compounded by stalled peace negotiations, pushed Arab Light crude prices above USD 110 per barrel in September, fueling concerns over Pakistan's inflation and external account outlook.
Despite several positive domestic developments, including an upgrade of Pakistan's sovereign credit rating by S&P Global Ratings to 'B' with a stable outlook, the market sentiment remained cautious. The State Bank of Pakistan's foreign exchange reserves reached an all-time high, and the decision to maintain the policy rate at 11.5% was seen as a stabilizing factor. However, these measures were insufficient to offset the prevailing investor apprehension, exacerbated by rising domestic political uncertainty.
In the first quarter of FY27, major net sellers included Mutual Funds, Banks, and Foreign investors, with outflows amounting to USD 64.2 million, USD 36.2 million, and USD 2.84 million, respectively. This selling pressure was primarily absorbed by Individuals and Corporates, who recorded inflows of USD 92.8 million and USD 25.4 million, respectively. Trading activity also saw a decline, with average trading volumes for the KSE-All Index decreasing to 748.5 million shares from 834.1 million shares in the previous quarter. The average trading value dropped by a moderate move of 12.6% to approximately USD 118.5 million.
Sector-wise, Cement, Power, and Technology were the primary detractors, eroding 1,901, 1,437, and 1,287 points from the KSE-100 Index, respectively. Additionally, Commercial Banks and Fertilizer sectors faced pressure, collectively eroding 1,788 points, while the Refinery and Insurance sectors partially offset the decline by adding 742 and 132 points, respectively.
The MCB Pakistan Opportunity Fund Dividend Yield Plan reported a return of -3.85% against the benchmark's return of -4.71%. As of the end of September, the fund was 87.9% invested in Equities and 11.1% in Cash, with net assets standing at PKR 3,638 million and a NAV per unit of PKR 345.3344.