Pakistan’s KSE-100 benchmark index dropped approximately 2,300 points in selling pressure, settling at around 175,800, as investors digested the sharp fuel price revision effective July 18 and the ongoing escalation of the US-Iran conflict (Business Recorder).
The session’s decline reversed a portion of recent gains on the index, which had risen 1.65% in the previous session. Selling was broad-based across energy, industrials and consumer sectors — the categories most directly exposed to higher fuel and logistics costs and to dampened household consumption from rising petrol and diesel prices.
The July 18 fuel revision — petrol up Rs5.44 to Rs316.15 and diesel up Rs31.05 to Rs354.35 — was the first revision under Pakistan’s new daily OGRA pricing mechanism. The size of the diesel increase in particular, Rs31.05, was significantly larger than any single revision under the previous fortnightly system, and will add directly to the operating cost base of transportation, agriculture and industrial companies listed on the exchange.
The US-Iran conflict’s seventh consecutive night of strikes and Iran’s threat of a “full-scale offensive” added macro risk uncertainty to what was already a challenging environment for Pakistan equities. The Strait of Hormuz crisis poses an ongoing upside risk to global oil prices — and therefore a continuing source of pressure on both the Pakistan current account and domestic inflation.
The rupee remained broadly stable, with the US dollar trading at approximately Rs279 in interbank and open-market sessions. The relative currency stability reflects the SBP’s management of forex reserves, which stood at approximately $18 billion in the most recent data. Any sustained deterioration in the current account from higher energy import costs would eventually test the rupee’s stability.
