PSX soars 44pc in FY26: Index likely to cross 200,000-level by Dec
KARACHI: Pakistan’s equity market delivered another stellar year in FY2025-26, with the benchmark KSE-100 Index gaining 44 percent in rupee terms and 46 percent in US dollar terms, as improving macroeconomic stability under the IMF programme continued to bolster investor confidence despite heightened geopolitical volatility during the second half of the fiscal year.
According to a year-end market outlook the KSE-100 Index closed FY26 at 180,302 points, extending a three-year rally that has generated cumulative returns of 335 percent in rupee terms and 347 percent in US dollar terms since FY24.
Market performance during FY26 was divided into two distinct phases. During the first half of the fiscal year, the benchmark index advanced 39 percent, driven by improving economic indicators despite flood-related disruptions in July and August 2025.
However, the second half remained highly volatile, with the KSE-100 touching an intra-period high of 189,167 points on January 23, 2026, before falling to 146,480 points on March 9, reflecting a volatility range of around 29 percent.
Analysts attributed the sharp swings primarily to the Iran-US/Israel conflict, which pushed global oil prices higher and raised concerns over Pakistan’s external account because of its heavy dependence on imported energy. Investor sentiment was further affected after Pakistan announced the repayment of US$3.5 billion in UAE deposits during April 2026.
However market confidence recovered after the government introduced measures to manage petroleum demand and secured additional financial support from Saudi Arabia. Pakistan also successfully raised US$750 million through a Eurobond in April and US$250 million through a Panda Bond in May, easing concerns over external financing.
Analysts at Topline Securities noted that easing of geopolitical tensions through the Iran-US memorandum of understanding, coupled with record monthly workers’ remittances of US$4.3 billion in May 2026, helped the market regain momentum, lifting the benchmark index back above the 180,000-point level by the close of FY26.
Despite the strong annual performance, the brokerage observed that the benchmark index remained around 5 percent below its January peak while recovering approximately 23 percent from its March low.
On investor activity, the report showed foreign investors remained net sellers during FY26, with foreign corporates recording net sales of US$895 million. Excluding divestments in PIOC and RMPL, net foreign corporate selling stood at US$542 million.
Among domestic participants, companies and mutual funds emerged as the largest buyers during the year, while banks, insurance companies and brokers remained net sellers.
Topline said Pakistan’s improving macroeconomic indicators continued to provide support for equities. Inflation averaged 6.69 percent during the first 11 months of FY26, while the brokerage expects inflation to remain within the 8.0-8.5 percent range in FY27.
The report also highlighted an improving external account, with Pakistan posting a current account surplus of US$255 million during the first 11 months of FY26, compared with a deficit a year earlier, supported by record remittance inflows.
Topline maintained that continued macroeconomic stability, stronger corporate profitability and easing external sector risks could support further gains in Pakistan’s equity market, projecting the KSE-100 Index to reach 203,000 points by December 2026.
Copyright Business Recorder, 2026