KARACHI: Pakistan’s equity market extended its New Year rally on Monday, with strong buying driven by asset-allocation flows and easing macroeconomic signals, pushing the benchmark index to fresh record levels.
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The Pakistan Stock Exchange’s (PSX) KSE-100 Index closed at 182,408.23 points, gaining 3,373.3 points, or 1.88%, from the previous close of 179,034.93. Over the first three trading sessions of 2026, the benchmark has added a cumulative 8,353.92 points, representing a gain of 4.80%.
During Monday’s session, the index touched a new all-time intraday high of 183,964.37 points, up 4,929.44 points, or 2.75%, from the previous close. The session’s low stood at 179,535.46 points, still 500.53 points, or 0.28%, higher than the prior close.
“An overall positive start to the year is being witnessed as investors pour in massive liquidity to meet annual asset-allocation targets,” said AAH Soomro, an independent investment and economic analyst, while cautioning that the market may be moving “too fast, too soon.”
Market sentiment remains constructive, with research houses pointing to supportive fundamentals. AKD Research said optimism could strengthen further on expectations of foreign portfolio and direct investment inflows. The brokerage projected that the KSE-100 Index could extend its uptrend towards 263,800 points by December 2026, underpinned by easing monetary conditions, improving external accounts and steady reform momentum.
The index had already advanced 6,634 points, or 3.8% week-on-week, last week to a then-record close of 179,035 points. Gains were supported by a softer-than-expected Consumer Price Index (CPI) reading of 5.6% for December 2025, reinforcing expectations of further monetary easing.
On the macro front, Pakistan’s trade deficit widened 24% year-on-year to $3.7 billion in December 2025, while GDP growth was recorded at 3.7% year-on-year in the first quarter of FY26. State Bank of Pakistan (SBP) foreign-exchange reserves rose $13 million week-on-week to $15.9 billion as of December 26, while the rupee appreciated marginally by 0.02% to 280.11 against the US dollar.
The central bank reported net purchases of $6.9 billion from the currency market over the past 12 months. Meanwhile, the Federal Board of Revenue (FBR) collected Rs6.2 trillion in the first half of FY26, falling short of the target by Rs338 billion.
Authorities have also explored a $1 billion liability settlement through potential UAE investment in Fauji Group, while the United States signalled renewed interest in partnerships covering locomotive sales and mineral exploration. Plans to launch Pakistan’s first Panda bond in China were also outlined.
Inflation data further supported sentiment, with weekly inflation measured by the Sensitive Price Indicator (SPI) falling 0.67% in the week ended January 1, 2026, to 333.96, according to the Pakistan Bureau of Statistics (PBS). On a year-on-year basis, SPI rose 2.41%, while declines were recorded across all consumption groups.
