KARACHI: Pakistan’s equity market maintained strong upward momentum during the outgoing week, as sustained domestic buying, easing monetary conditions and supportive global cues combined to lift investor sentiment, pushing the benchmark index decisively higher.
The KSE-100 Index advanced 5,375 points, or 3.0 percent week-on-week, to close at 184,410 points, extending gains at the start of calendar year 2026. The rally was supported by a marked improvement in market participation, with average daily traded volume rising 24.7 percent week-on-week to 1.57 billion shares, compared with 1.26 billion shares in the previous week, indicating broad-based investor engagement.
During the week ended January 9th, BRIndex100 opened at 19,169.73 and recorded a strong upward trajectory to close at 19,684.24. Total turnover on BRIndex100 stood at 4.84 billion shares, reflecting robust investor participation. Meanwhile, BRIndex30 also posted a solid performance during the week, opening at 61,060.05 and closing at 62,270.21. Total turnover on BRIndex30 amounted to 2.88 billion shares, highlighting strong activity in the most liquid stocks.
According to analysts, the market moved sharply upward during the week, driven by a combination of favourable domestic macroeconomic indicators and improving external dynamics. Easing inflation and declining interest rates continued to shift asset allocation in favour of equities, particularly amid subdued returns in fixed-income instruments.
Geopolitical and diplomatic developments further reinforced the positive tone. Reports of improved relations and potential defense cooperation with countries including Saudi Arabia, Bangladesh and Azerbaijan, alongside constructive engagements with China aimed at strengthening bilateral coordination and accelerating CPEC Phase II, were viewed as supportive for medium-term economic prospects.
However, market capitalization declined to Rs19.32 trillion ($68.99 billion) from the previous week, reflecting currency and valuation adjustments.
On the macroeconomic front, workers’ remittances remained a key anchor, with inflows reaching $3.6 billion in December 2025, up 17 percent year-on-year, taking total remittances during 1HFY26 to $19.7 billion, reflecting 11 percent growth. In addition, central government debt declined by Rs345 billion during 5MFY26 to Rs77.5 trillion, underscoring improved fiscal discipline.
In the fixed-income market, declining inflation expectations translated into a sharp drop in treasury yields. At the first T-bill auction following easing inflation, yields on 1-month, 3-month, 6-month and 12-month papers fell by 29bps, 34bps, 32bps and 33bps, respectively. Analysts believe this decline has materially enhanced equity valuations, particularly for dividend-paying sectors.
Sector-level indicators remained encouraging. Cement offtakes increased by 1.5 percent year-on-year in December 2025, supported by a 6 percent rise in domestic dispatches, signaling early signs of recovery in construction activity. Market participants expect pricing discipline to persist, given that any newly planned capacity expansions would take time to come online.
External sector indicators continued to improve. SBP-held foreign exchange reserves rose by $141 million week-on-week to $16.1 billion, while the Pakistani rupee appreciated marginally by 0.03 percent, closing the week at Rs280.02 per US dollar.
Sector-wise performance on the PSX was largely positive, with Transport stocks leading the rally, rising 7.2 percent week-on-week, followed by Pharmaceuticals (+6.5percent), Insurance (+6.3percent), Refineries (+6.0percent) and Leather & Tanneries (+6.0percent). On the downside, Textile Spinning (-6.6percent), Vanaspati & Allied Industries (-4.7percent), Jute (-1.4percent), Miscellaneous (-0.7percent) and Closed-End Mutual Funds (-0.5percent) lagged the broader market amid selective profit-taking.
Investor flow data underscored the dominance of local institutions. Mutual funds recorded net buying of $71.5 million, reflecting increased equity allocations amid declining yields. Corporate investors followed with net inflows of $35.5 million, while banks and foreign investors remained net sellers, offloading $56.3 million and $42.5 million, respectively.
At the stock level, Adamjee Insurance Company Limited (AICL) emerged as the top performer, surging 32.1 percent week-on-week. Other notable gainers included MCB Bank (+12.9percent), Abbott Laboratories Pakistan (+11.5percent), Haleon Pakistan (+11.4percent) and Sazgar Engineering (+10.5percent). Meanwhile, Pakistan Services Limited (PSEL) led the laggards, declining 15.5 percent, followed by SSOM, GHGL, DHPL and International Steels Limited (ISL).
From a valuation perspective, analysts noted that despite delivering strong returns over the past three years, Pakistan equities continue to trade at a significant discount to regional peers, while offering an attractive dividend yield of over 6 percent for CY26, strengthening the case for equities amid macro stability.
Copyright Business Recorder, 2026
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