PSX continues record run as FY26 starts on a high note

The capital market continued its record-breaking momentum on Tuesday, fuelled by budget clarity, falling interest rates, and sustained investor optimism, following the close of a stellar fiscal year marked by macroeconomic gains and strong foreign support.

The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index climbed to an intraday high of 128,149.46, gaining 2,522.15 points, or 2%, while the session’s low stood at 126,113.27, up 485.96 points, or 0.39%, from the previous close of 125,627.31.

“Aggressive buying by local investors has pushed the KSE-100 Index past the 128,000 mark, gaining over 2% from yesterday’s close," said Mohammad Sohail, CEO of Topline Securities.

"The rally comes on the back of budget clarity and declining interest rates, prompting increased equity exposure from domestic investors,” he added.

Stocks ended the fiscal year 2025 with a remarkable 60% year-on-year gain, as the benchmark index settled at a historic high on Monday following a 1,248-point surge, driven by renewed investor confidence after China refinanced and rolled over $3.4 billion in commercial loans to Pakistan.

According to Topline Research, the KSE-100 Index has risen 60% in PKR terms and 57% in USD terms over FY25, making it the eighth best-performing stock market globally. Over the past two years (FY24–25), the index has posted a cumulative gain of 203% in PKR and 206% in USD, underpinned by macroeconomic stability secured through the IMF programme.

Amreen Soorani, Head of Research at Al Meezan Investment, noted: “The PSX's ongoing rally is a long-overdue recognition of corporate profit growth that's been building since 2017, previously overshadowed by macroeconomic concerns."

"Even after a 3x gain in two years, the PSX's P/E sits at a mere 6.3x. This is still low compared to its historical average of 7-8x, and significantly below the 10x+ seen in more prosperous times. As companies continue to deliver strong profits and dividends, a return to these historical valuation norms takes the index to around 150,000, signalling ample room for further valuation upside as ongoing macro reforms solidify,” she added.

Other catalysts for the bull run included the completion of Pakistan’s first IMF review in March 2025, aggressive monetary easing from 20.5% to 11%, Fitch’s upgrade of Pakistan’s credit rating from CCC+ to B-, improving macroeconomic indicators, and rising market liquidity as investors shifted capital from fixed income to equities.