KARACHI: The Pakistan Stock Exchange (PSX) closed a roller-coaster week on Friday, February 20, 2026, leaving investors catching their breath after a period of intense volatility. While a late Friday recovery offered a glimmer of hope, the benchmark KSE-100 index remains under significant pressure, grappling with a cocktail of domestic political noise, rising short-term inflation, and a cautious global sentiment.
Market Performance: A Friday Save After a Mid-Week Slump
The KSE-100 index ended the week at 173,169.71 points, staging a recovery of 999.42 points (0.58%) on the final trading day. However, this bounce-back must be viewed in the context of a bruising month; the index has shed nearly 10% from its January peak of over 191,000 points.
Earlier in the week, the “bears” were firmly in the driver’s seat. On Monday, February 16, the market suffered a staggering blow, losing over 5,000 points in a single session. This downward momentum was largely attributed to foreign outflows and a wave of “panic selling” as geopolitical tensions in the region simmered.
The “Ramadan Effect” and Inflationary Pressures
A key factor weighing on investor sentiment this week was the release of the Sensitive Price Index (SPI) data. Short-term inflation rose by 5.19% year-on-year for the week ending February 19.
With the start of Ramadan, the cost of essential commodities—particularly perishable food items—saw a sharp spike. Bananas led the surge with a 16.05% increase, while garlic and chicken also saw significant upticks. For the market, this signals potential pressure on consumer spending and keeps the State Bank of Pakistan (SBP) in a watchful “wait-and-see” mode regarding future interest rate cuts, despite the current policy rate holding at 10.5%.
Sector Highlights and Volume Leaders
Despite the overall bearish tone, Friday’s recovery was broad-based, led by “bargain hunting” in blue-chip stocks that had reached attractive valuation levels.
- Top Gainers: The energy and banking sectors provided the necessary support. Oil & Gas Development Company (OGDC), Pakistan Petroleum Limited (PPL), and Systems Limited (SYS) were among the primary drivers of the Friday rally.
- Volume Leaders: Retail favourites continued to dominate activity. K-Electric (KEL) saw massive turnover with over 73 million shares changing hands, followed by WorldCall Telecom (WTL) and Bank of Punjab (BOP).
- The Laggards: Industrial heavyweights like Fauji Fertiliser Company (FFC) and Habib Bank Limited (HBL) faced selling pressure earlier in the week as institutional investors trimmed their risk portfolios.
| Symbol | Closing Price (PKR) | Change (%) | Volume (Millions) |
| KEL | 8.03 | +2.29% | 73.13 |
| WTL | 1.38 | -1.43% | 46.20 |
| PPL | 229.02 | +2.36% | 6.43 |
| SYS | 141.90 | +2.74% | 1.80 |
Analyst Outlook: Stability vs. Uncertainty
Market analysts suggest that while the current valuations are “screaming buy” for long-term investors, the short-term remains clouded. The “political noise”—specifically regarding the medical condition of incarcerated former PM Imran Khan and subsequent protests—has increased the risk perception for foreign investors, leading to sustained outflows.
However, the macroeconomic foundation remains relatively sturdy. The SBP recently revised its GDP growth forecast for FY26 upward to a range of 3.75% – 4.75%, citing improved industrial output and a stabilising current account.
The Week Ahead
As we head into the final week of February, all eyes will be on the foreign investment data (FIPI) and any further developments on the political front. If the KSE-100 can sustain its position above the 170,000 psychological barrier, we may see a “pre-Ramadan” recovery. Conversely, if geopolitical tensions escalate, the market could test its next support level at 168,000.
