KARACHI: The Pakistan Stock Exchange (PSX) continued to face selling pressure on Tuesday, although a late-session recovery helped pare earlier losses as bargain hunters entered the market following Monday’s steep decline. Investor sentiment remained fragile due to elevated government bond yields, tightening monetary policy expectations, and renewed uncertainty surrounding US trade measures and geopolitical developments.
The benchmark KSE-100 Index closed at 166,258.54, shedding 1,432.54 points, or 0.85%, compared to the previous close of 167,691.08. During the session, the index swung sharply — reaching an intraday high of 169,237.51 (up 0.92%) before tumbling to a low of 163,907.59 (down 2.26%).
Market participants attributed the persistent weakness to rising yields observed in last week’s State Bank auction, which reinforced concerns about monetary tightening amid accelerating inflation and subdued corporate earnings outlooks.
Ahsan Mehanti, Managing Director and CEO of Arif Habib Commodities, noted that higher bond yields and expectations of stricter monetary policy triggered heavy selling. He added that uncertainty surrounding US trade tariffs, ongoing geopolitical tensions, and ambiguity over the IMF’s third review talks further dampened investor confidence.
Fresh US tariffs on imported goods came into effect Tuesday after President Donald Trump revived elements of his trade agenda in response to a Supreme Court ruling that had invalidated several broad-based duties. The newly implemented tariffs start at 10%, with indications they could rise to 15%. Sector-specific duties on steel and automobiles remain in place. The measures are scheduled to remain effective for 150 days unless Congress extends them.
Geopolitical concerns also weighed on markets. President Trump stated he would decide within “10 or 15 days” whether to authorize military strikes against Iran should nuclear negotiations fail. Reports suggest military options under consideration include direct action against Iran’s Supreme Leader. The US and Iran have held indirect discussions in Oman and Switzerland, with further talks expected later this week, though key differences persist.
Independent analyst AAH Soomro described Tuesday’s recovery as a technical rebound driven by selective value buying, noting that broader market direction will likely hinge on progress in US-Iran negotiations.
On the macroeconomic front, Pakistan recorded a current account surplus of $121 million in January, supported by robust remittance inflows and reduced imports. However, the cumulative balance for the first seven months of FY26 showed a deficit of $1.07 billion, compared to a surplus of $564 million during the same period last year, reflecting a pickup in imports alongside moderate export growth.
Inflation data also remained in focus. The Sensitive Price Indicator (SPI) rose 1.16% week-on-week for the period ending February 19, pushing the index to 335.67. On a year-on-year basis, SPI inflation stood at 5.19%, according to the Pakistan Bureau of Statistics.
The previous session had witnessed a sharp sell-off, with the KSE-100 plunging 5,478.63 points, or 3.16%, to close at 167,691.08 after trading between 174,336.86 and 166,886.63.
