KARACHI: The Pakistan Stock Exchange (PSX) capped off a powerful week of gains as the benchmark KSE-100 Index surged to an all-time closing high of 189,166.83 points, rising 4,068 points or 2.2 percent week-on-week, supported by easing geopolitical tensions, renewed foreign engagement, falling government bond yields, and strengthening expectations of further monetary easing.
The index opened the week at 185,098.83 and remained firmly positive throughout the period, reflecting sustained investor confidence and improved market participation.
Trading activity strengthened notably, with average daily turnover on the Ready Board rising 16 percent week-on-week to 1.13 billion shares from 981.95 million shares last week. In value terms, Ready Board daily turnover increased to Rs61.01 billion from Rs58.47 billion, while dollar turnover reached USD217.96 million, up from US$208.83 million.
Total market capitalization advanced 1.2 percent to Rs21.22 trillion, while dollar capitalization rose to USD75.82 billion.
Momentum during the week was anchored by a major shift in the government debt market, as Treasury bill cut-off yields declined to single-digit levels for the first time in four years. Cut-offs declined by 16 to 31 basis points across maturities, after the government raised Rs726 billion against a target of Rs700 billion, reinforcing expectations of further easing in the policy rate.
Sentiment was further supported by easing geopolitical tensions and positive meetings with China, the United States, the United Kingdom and Saudi Arabia to advance economic partnerships, which boosted confidence across the equity market.
On the macroeconomic front, the International Monetary Fund revised Pakistan’s FY26 GDP growth forecast downward to 3.2 percent from 3.6 percent, while the country’s external position weakened as the current account deficit widened to US$244 million in December 2025, reversing a US$98 million surplus in November. The deterioration was driven primarily by a 17 percent year-on-year rise in imports, while exports declined 11 percent YoY, taking the cumulative current account deficit for 1HFY26 to USD1.2 billion. JS Global reported that overall FDI for 1HFY26 declined 43 percent to USD808 million, compared with US$1.4 billion in the same period last year.
Meanwhile, the other positive macro indicators included power generation rising 8.8 percent YoY in December 2025, while the IT sector recorded its highest-ever monthly exports at US$437 million, up 26 percent YoY.
On the external liquidity front, State Bank of Pakistan-held foreign exchange reserves increased by US$16 million week-on-week to USD16.1 billion as of January 16, remaining broadly stable around the US$16 billion mark. The Pakistani rupee appreciated 0.03 percent WoW, closing the week at Rs279.86 per US dollar.
In parallel, the government is reportedly seeking a USD36 billion low-cost financing package at 1–2 percent from international financial institutions and Saudi Arabia starting FY27 to refinance the power sector’s debt burden in order to reduce electricity tariffs, particularly for the industrial sector. Among other major developments during the week were: Pakistan and China signing US$4.5 billion farm deals, Pakistan signing the Trump-led Board of Peace charter, government efforts to reduce industrial power tariffs, discussions for boosting pharma trade with the Philippines to US$1 billion, and foreign firms repatriating USD1.6 billion during 1HFY26.
Sector-wise, the rally remained broad-based and cyclical in nature. Refinery stocks surged 9.6 percent, followed by Fertilizer up 9.1 percent, Power rising 3.6 percent, Autos gaining 2.2 percent, OGMCs up 2.0 percent, and E&Ps advancing 0.7 percent. Pharmaceuticals and Chemicals also posted marginal gains.
On the downside, engineering declined 1.0 percent, technology and communication fell 1.8 percent, banks lost 0.5 percent, while food, cement and textile composite sectors also closed in negative territory. By traded volume, power accounted for 16 percent, banks 11 percent, and technology and communication 10 percent, while all other sectors collectively made up 48 percent of total activity.
At the end of week, AICL led the gainers, closing at Rs120.36, up 20.4 percent, followed by ATRL (+15.0 percent), FATIMA (+13.1 percent), SAZEW (+12.0 percent), ENGROH (+10.6 percent), FFC (+9.7 percent) and SRVI (+7.3 percent). On the losing side, PIOC (-11.8 percent), KTML (-5.9 percent), TGL (-3.8 percent), SYS (-3.5 percent), PAEL (-3.1 percent), PTC (-3.0 percent) and SSGC (-2.7 percent) closed lower.
Looking ahead, analysts expect the positive momentum in the KSE-100 to continue, citing further monetary easing, improving external account dynamics, sustained reform focus and political stability.
Copyright Business Recorder, 2026