KARACHI:

Geopolitical tensions and rising international oil prices triggered a fresh sell-off at the Pakistan Stock Exchange (PSX) on Wednesday, with investors turning cautious and trimming positions amid uncertainty about the US-Iran conflict.

The benchmark KSE-100 index failed to hold early gains and closed at 174,429.93, down 1,703.64 points, or 0.97%. The market opened with a marginal positive bias, rising 14.07 points at 9:39 am. However, the initial strength proved short-lived as selling emerged across key sectors. The index touched the intra-day high of 176,255.64 before reversing direction and hitting the low of 174,104.07.

Nawaz Ali of JS Global said bearish sentiment dominated trading at the PSX as investors opted to book profits or remain on the sidelines amid geopolitical tensions. The KSE-100 index settled at 174,430, shedding 1,704 points. Rising uncertainty surrounding the US-Iran conflict drove international crude oil prices higher, raising concerns over the potential impact on Pakistan's import-dependent economy. "We recommend investors to adopt a 'buy-on-dips' strategy as any de-escalation in regional tensions could improve investor confidence," he added.

"The market remained under pressure as Brent crude hovered near $96 per barrel amid escalating tensions in the Middle East. In addition to concerns over the Strait of Hormuz, growing fears about the Bab el-Mandeb corridor further dampened investor sentiment and kept the risk appetite subdued," said Ahmed Sheraz of KASB KTrade.

Sector-wise, commercial banks, cement and fertiliser led the decline where UBL, Fauji Fertiliser, Engro Holdings, Hub Power and Lucky Cement were the major negative contributors. Trading activity remained subdued on the KSE-100, with around 266 million shares changing hands.

In a positive development, UBL reported strong quarterly results, with earnings per share of around Rs15 along with cash dividend of Rs8 per share. The bank recorded a 13% growth in deposits, reflecting continued strength in its core business and earnings momentum. "Looking ahead, the market is expected to be largely driven by geopolitical developments and oil prices," Sheraz said.

Ali Najib of Arif Habib Limited said investor interest remained subdued throughout the session as the US and Iran exchanged fresh strikes. The heightened uncertainty pushed international oil prices higher, with WTI and Brent crude rising to $88.61 and $95.47 per barrel, respectively, further weighing on market sentiment.

The rise in global oil prices revived concerns over Pakistan's external account, given the country's reliance on imported energy. A prolonged period of elevated crude prices could increase the import bill and put pressure on external balances.

At the PSX, commercial banks, cement and fertiliser stocks came under pressure. The banking sector also remained in focus following strong earnings from UBL as the bank posted profit after tax of Rs37.4 billion for the second quarter of 2026 and earnings per share of Rs14.97, up 31% year-on-year. The bank also announced a cash dividend of Rs8 per share, taking cumulative payout for the first half to Rs16.

On the macroeconomic front, Pakistan received a positive signal as S\&P upgraded the country's sovereign credit rating to 'B' from 'B-', while maintaining a stable outlook. The upgrade reflected progress on IMF-backed reforms, improved fiscal metrics and stronger external buffers. However, the development failed to offset the immediate impact of geopolitical uncertainty on market sentiment, Najib noted.

Overall trading volumes decreased to 695.7 million shares compared with the previous tally of one billion. The value of traded shares stood at Rs25.4 billion.

Shares of 493 companies were traded. Of these, 108 stocks closed higher, 353 dropped and 32 remained unchanged.

Trust Brokerage was the volume leader with trading in 134.2 million shares, edging up Rs0.02 to close at Rs2.41. Foreign investors sold shares worth Rs5.99 million, the National Clearing Company reported.