The Pakistan Stock Exchange (PSX) emerged as the third worst-performing equity market worldwide during the March 2026 quarter, delivering negative returns of 14.5% in rupee terms and 14.6% in dollar terms, according to data.
Only India and Indonesia recorded steeper declines, posting losses of 19.4% and 19.0% in dollar terms, respectively. In contrast, countries like Ghana, Oman, and Nigeria reported strong positive returns of 43.6%, 42.3%, and 34.1%, highlighting a divergence in global equity performance.
Research firms attributed Pakistan’s underperformance to heightened geopolitical tensions in the Middle East, which adversely affected investor sentiment, and rising domestic inflation driven by higher global energy prices. Market volatility was further compounded by uncertainty over macroeconomic stability.
AKD Research noted that the PSX remained volatile, with the benchmark KSE-100 Index dropping 1,309 points to close at 150,399, while average daily traded volumes fell 31% WoW to 604 million shares. Positive sentiment early in the week was supported by:
- Pakistan-led diplomatic efforts for de-escalation
- CPI increase remaining lower than expected at 7.3% YoY in Mar’26
- Pakistan securing a staff-level IMF agreement for $1.2 billion
However, conflicting statements from Iran and the U.S., along with fears of a possible ground invasion, weighed on market sentiment.
On the macroeconomic front, 2QFY26 GDP growth improved to 3.9% YoY, while the trade deficit widened 4% YoYto $2.7 billion in March. The government also raised fuel prices, with HSD and MS increasing by Rs184.5 and Rs137.2 per litre, respectively.
Sectoral performance showed OMC sales up 19% YoY to 1.4 million tons, while cement offtakes rose 1% YoY. T-bill yields showed mixed trends, declining for 1- and 6-month papers and increasing for 3- and 12-month tenors.
AKD Research suggested that any de-escalation in the Middle East conflict could trigger a rebound in the PSX, as valuations are now considered attractive, with forward P/E at 6.4x.
