Pakistan’s benchmark stock market ended the March 2026 quarter among the three worst-performing equity markets in the world, as escalating geopolitical tensions and rising oil prices triggered heavy selling pressure.
According to a report by Topline Securities, the benchmark KSE 100 Index posted a return of negative 14.5 percent in rupee terms and negative 14.6 percent in US dollar terms during 3QFY26, placing Pakistan as only behind India and Indonesia as the weakest-performing major markets. This is broadly in line with other market reports showing the PSX down around 15 percent in the first quarter of 2026.
The sharp decline was largely driven by investor concerns surrounding the US-Israel war against Iran, which pushed global oil prices sharply higher and raised fears of imported inflation for Pakistan’s economy.
Higher energy prices have also intensified concerns over the country’s external account, inflation outlook, and interest rate trajectory, all of which weighed heavily on market sentiment during the quarter. Similar pressure has been seen across other import-dependent emerging markets as oil prices surged due to the Middle East conflict.
A combination of geopolitical uncertainty and expectations of rising domestic inflation led to risk-off positioning by investors, particularly in oil-sensitive and cyclical sectors.
The correction comes after several years of strong gains for the KSE-100, with the latest quarter marking one of the sharpest pullbacks in recent periods.