ISLAMABAD, Feb. 27, 2026 — Pakistan’s benchmark stock index fell sharply Friday after reports of cross-border airstrikes targeting Afghan government sites, before trimming losses later in the session as no immediate retaliation was reported.
The KSE-100 index at the Pakistan Stock Exchange dropped as much as 3,081 points, or 1.82 percent, in early trading amid heightened geopolitical tensions between Islamabad and Kabul. It later recovered part of the decline to close at 168,062 points, down 0.49 percent on the day.
The volatility followed confirmation by Pakistan’s military that it had struck targets in Kabul and Kandahar, escalating an already fraught security situation along the two countries’ shared border. Investors initially reacted with broad-based selling, citing fears of further military confrontation and regional instability.
“KSE-100 Index opened on a negative note and declined to make an intraday low of -3,081 points (down by -1.82 percent), this negativity can be accredited to regional tension with Afghanistan,” brokerage house Topline Securities said in its market commentary.
Traders said the absence of an immediate retaliatory response from Kabul helped calm markets later in the session, allowing equities to recoup a significant portion of earlier losses.
Banks, energy stocks weigh on index
The day’s decline was led by heavyweight banking and energy shares. United Bank Limited, Fauji Fertilizer Company, Oil and Gas Development Company, Pakistan Petroleum Limited and MCB Bank Limited collectively shaved 658 points off the benchmark index.
National Bank of Pakistan, MCB Bank, Pakistan Petroleum Limited, Bank of Punjab and Bank Alfalah were among the most actively traded stocks by value.
Total traded volume reached 533 million shares, with turnover of 25.5 billion rupees.
Inflation concerns ahead of policy meeting
Separately, analysts said Pakistan’s headline inflation is likely to tick higher in February, potentially complicating the outlook ahead of the State Bank of Pakistan’s monetary policy meeting scheduled for March 9.
Brokerage firm Insight Research estimated headline inflation at around 7.4 percent for February, compared with roughly 5.8 percent in the preceding month and about 1.5 percent in the same period last year.
“The increase is mainly driven by a low base effect,” the firm said.
The confluence of geopolitical tensions and inflationary pressures adds to investor uncertainty at a time when Pakistan is seeking to stabilize its economy and maintain fragile market confidence.
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