Pakistan’s capital market remained resilient in Q3FY26 despite a difficult global backdrop shaped by the U.S.-Iran war, rising oil prices, higher freight and insurance costs, and broad risk-off sentiment, according to the Securities and Exchange Commission of Pakistan (SECP)’s Quarterly Market Review.
In its latest report, which equity market performance, investor activity, debt markets, macro trends, global factors, and key reforms, the SECP noted the conflict pushed Brent crude up by 10-13% in the early days of the war. U.S. software stocks declined about 23%, while the S&P 500 fell 4.3%, MSCI Europe ex-U.K. dropped 3.2%, MSCI Asia slipped 1.1%, and MSCI Emerging Markets eased 0.1%.
Against this backdrop, Pakistan’s KSE-100 declined 14.54% during the quarter. Despite this, strong domestic investors’ participation, continued primary market activity, and regulatory reforms helped sustain market confidence.
The KSE-100 started the quarter at 174,054 points. It reached an all-time high of 191,033 on Jan. 26 before closing at 148,743 on March 31. The intra-quarter low was 144,119 on March 19, showing a peak-to-trough decline of 22.57%. The KSE All Share index fell 14.85%, while the KSE-30 declined 15.52%.
January remained strong, with the KSE-100 gaining 5.81%. Sentiment weakened in February due to rising costs, geopolitical risks, and profit-taking, leading to a 3.75% decline. The correction deepened in March, with the index falling 11.5%.
Despite the decline, market activity remained strong. Market capitalization fell from Rs. 19.69 trillion to Rs. 16.53 trillion, a drop of Rs. 3.15 trillion. Total traded volume stood at 48.8 billion shares, while traded value reached Rs. 2.68 trillion. Average daily volume was 791.7 million shares and average daily value was Rs. 44.03 billion. Around 485 symbols remained active per session, indicating broad participation.
Domestic investors played a key stabilizing role. Foreign investors recorded net outflows of Rs. 111.61 billion, with foreign corporates alone selling Rs. 117.07 billion. Local institutional and retail investors absorbed this entirely, with net buying of Rs. 111.55 billion. Companies led with Rs. 73.51 billion in purchases, followed by mutual funds at Rs. 23.78 billion and individuals at Rs. 20.25 billion.
Trading remained concentrated in blue-chip stocks. National Bank of Pakistan led with Rs. 182.42 billion in traded value, followed by Pakistan Petroleum, OGDC, Fauji Fertilizer, and Habib Bank. By volume, K-Electric led with 4.64 billion shares, followed by Bank of Punjab and WorldCall Telecom.
Primary market activity continued. SECP approved three IPOs during the quarter, reflecting sustained confidence in capital markets. On the debt side, three GoP Ijara Sukuk auctions were held with a target of Rs. 800 billion. Bids reached Rs. 2.03 trillion, with a bid-to-cover ratio of 2.54 times. The government accepted Rs. 811.53 billion.
Secondary debt market activity also remained strong. GoP Ijara Sukuk worth Rs. 185.14 billion were traded in 2,062 transactions. Trading on the PSX bills and bonds counter reached Rs. 260.94 billion. Two privately placed corporate sukuk were also listed during the quarter.
The SECP said the quarter was exceptionally challenging. However, the market showed durability under stress. Strong participation by domestic institutional and retail investors, active debt markets, IPO activity, and regulatory reforms supported stability. These factors indicate improving fundamentals and support long-term growth and investor confidence in Pakistan’s capital market.