The Pakistan Stock Exchange (PSX) opened the new fiscal year on a bullish note, with the benchmark KSE-100 Index surging to an all-time high of 131,949.06 points during the week ended July 4, 2025. The index gained 7,570 points or 6.1% week-on-week, driven by improving macroeconomic indicators, foreign inflows, and strong investor sentiment.
The rally builds on momentum from the previous fiscal year (FY25), which closed with the PSX ranking the best-performing regional bourse, delivering a 60% annual return. Easing inflation, a reduction in electricity tariffs, and renewed interest from both local and foreign investors helped maintain the upward trajectory.
Investor confidence was further boosted after Bloomberg reported that Pakistan led all emerging markets in reducing default risk. The country's probability of default dropped sharply from 59% to 47%, the biggest decline globally. Meanwhile, the number of billion-dollar listed firms on the PSX rose from six in December 2023 to 11 by July 2025.
On Monday, the final trading day of FY25, the KSE-100 Index closed at a record 125,627 points, marking a 60% annual return. That day alone saw the index gain 1,248 points or 1%.
The bullish momentum carried into FY26. On Tuesday, the market broke through the 126,000, 127,000, and 128,000 levels in a single session, closing at 128,199 with a gain of 2,572 points or 2.05%.
On Wednesday, the index crossed the psychological barrier of 130,000 for the first time, closing at 130,344, up 2,145 points or 1.67%, amid growing optimism over improving fundamentals, a stable rupee, and increased foreign inflows.
Thursday saw a "tug of war" between bulls and bears, with volatility marking the session. However, the bulls ultimately prevailed, and the index closed at 130,687, gaining 343 points or 0.26%.
The week ended on Friday with another positive session. The KSE-100 climbed 1,262 points or 0.97% to close at 131,949, setting a new all-time high.
According to Arif Habib Limited's (AHL) weekly report, the KSE-100 Index surged from 125,627.31 to 131,949.06 during the week, posting a 6.1% gain. The rally was broad-based, supported by improved macroeconomic indicators. Inflation for June 2025 eased to 3.2% from 3.5% in May, as reported by the Pakistan Bureau of Statistics (PBS).
The National Electric Power Regulatory Authority (NEPRA) revised the electricity tariff downward to Rs31.59/kWh, from the earlier Rs32.73/kWhan average cut of Rs1.14 per unit.
Meanwhile, the Oil and Gas Regulatory Authority (OGRA) announced a hike in gas prices across domestic and other consumer categories, effective July 1, 2025.
In sector-specific developments, domestic cement sales declined by 2.4% year-on-year in FY25, falling to 38.6 million tonnes from 39.5 million tonnes in FY24.
Foreign exchange reserves received a major boost as the State Bank of Pakistan (SBP) reported an increase of $3.66 billion to $12.73 billionthe second-largest weekly jump on record.
On the regulatory front, the government introduced a National Electric Vehicle (NEV) levy, resulting in price increases across several car categories.
JS Global's Syed Danyal Hussain noted that the KSE-100 index's strong FY25 close and continued FY26 momentum reflect improving sentiment. The index's 6% week-on-week increase was complemented by a 31% rise in average daily turnover (ADTO).
Investor optimism was also driven by Pakistan securing $3.4 billion in rollover and refinancing from China, along with an additional $1.5 billion loan from Middle Eastern banks and multilateral institutions. Of this, $3.7 billion has already been reflected in reserves, pushing SBP's holdings to $12.7 billion.
The SBP expects remaining inflows next week, which could push reserves to $14.51 billion. June 2025's CPI came in at 3.2% year-on-year, bringing the FY25 average to 4.5%, a dramatic drop from 23.4% in FY24.
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