Pakistan’s stock market registered a sharp decline on Friday as investors resorted to profit-taking ahead of the weekend amid growing geopolitical uncertainty, which dragged the benchmark KSE-100 index down by 3,715 points to close near 157,500.

The negative session came a day after the market staged a strong rebound of around 3.5%, prompting cautious investors to lock in gains as fears intensified that the US-Iran conflict could escalate into a prolonged war, dampening risk appetite in regional markets. Market participants largely preferred to reduce exposure before the weekend, reflecting heightened uncertainty about global developments.

The KSE-100 slipped 2.3% during the session, with heavyweights including UBL, Engro Holdings, Fauji Fertiliser Company, Lucky Cement, Hub Power, Meezan Bank, Systems Limited, OGDC and Bank Alfalah collectively shaving 2,124 points off the benchmark index.

At the close of trading, the KSE-100 posted a significant loss of 3,714.58 points, or 2.30%, and settled at 157,496.10.

Pakistan’s stock market recorded a sharp weekly decline, with the benchmark index falling 6.21% week-on-week, while the market also experienced a maximum drawdown of 20.7% from its recent peak, according to a note from Arif Habib Limited (AHL). On Friday, the trading session ended on a broadly negative note as 82 shares declined while only 16 advanced, reflecting weak investor sentiment amid prevailing uncertainty.

Among the stocks contributing positively to the index, Attock Refinery gained 2.87% and Service Industries rose 2.16%. On the downside, UBL, Engro Holdings and Fauji Fertiliser emerged as the biggest drags on the index, declining 3.5%, 4.21% and 1.8%, respectively. Their losses weighed heavily on the overall market performance, contributing to the negative close for the session and extending the broader weekly decline, AHL said.

Market participants are now closely watching the upcoming monetary policy decision of the State Bank of Pakistan (SBP). According to the brokerage house, the central bank is expected to keep the policy rate unchanged at 10.5%, reflecting a cautious stance in light of the rapidly evolving global economic environment and heightened geopolitical uncertainties.

Analysts believe the SBP may prefer to maintain the current rate to monitor inflationary trends and external sector dynamics before considering any policy adjustments.

Investor sentiment may also hinge on geopolitical developments over the weekend. Market observers noted that any signs of de-escalation in global tensions could help improve confidence and potentially support a rebound in equities in the coming week. Conversely, persistent uncertainty in the international environment could keep investors risk-averse, limiting near-term upside in the market.

Topline Securities, in its review, said that the KSE-100 index witnessed a negative session as sceptical investors, after Thursday’s positive session in which the market rose 3.5%, came in to sell before the weekend due to fears that the US-Iran conflict may turn into a prolonged war.

The top negative contribution came from UBL, Engro Holdings, Fauji Fertiliser, Lucky Cement, Hubco, Meezan Bank, Systems Ltd, OGDC and Bank Alfalah as they cumulatively wiped off 2,124 points. Traded value-wise, Pakistan Petroleum (Rs1.83 billion), OGDC (Rs1.66 billion), Attock Refinery (Rs1.62 billion), UBL (Rs1.16 billion) and NBP (Rs980 million) dominated the activity, Topline said.

Overall trading volumes were recorded at 363.1 million shares compared with the previous tally of 723.9 million. The value of shares traded during the day was Rs23.1 billion.

Shares of 468 companies were traded in the ready market. Of these, 105 stocks closed higher, 311 fell and 52 remained unchanged.

K-Electric was the volume leader with trading in 36.9 million shares, losing Rs0.24 to close at Rs7.81. It was followed by Cnergyico PK with 22.4 million shares, losing Rs0.28 to close at Rs6.70 and Unity Foods with 19.05 million shares, losing Rs0.62 to close at Rs9.46. Foreign investors sold shares worth Rs571 million, the National Clearing Company reported.