Rate cut hopes propel PSX to highs

KSE-100 index climbs 3,373 points, aided by macro stability, mutual fund buying

KARACHI:

In a robust rally, the Pakistan Stock Exchange (PSX) on Monday skyrocketed to a new peak above 182,400, up 3,373 points, owing to expectations of further monetary easing and macro stability.

During the trading session, the benchmark KSE-100 index touched the intra-day high of 183,964, while the day's low was recorded at 179,535, reflecting healthy activity. Buying interest was mainly observed in key sectors like fertiliser, cement, commercial banks and oil & gas companies.

Investor sentiment was supported by fresh buying at the start of the new year and anticipation of a potential rate cut in the upcoming monetary policy announcement later this month.

At close, the benchmark KSE-100 index recorded a surge of 3,373.31 points, or 1.88%, and settled at 182,408.24.

"Investors are optimistic on expectations of further monetary easing, driven by improving external account position and continuous focus on reforms amid political stability," AKD Securities Director Research Mohammed Awais Ashraf told The Express Tribune.

Subdued returns on alternative asset classes, coupled with a stronger currency, were expected to make equities a preferred investment choice in CY26, he said.

Ashraf anticipated that the KSE-100 index would reach 263,800 by Dec'26, implying a return of 53%, or 48.4% in US dollar terms. This return paves the way for the index to reach a historic $100 billion market capitalisation for the first time. He believes that improving relations with the US and GCC countries will help revive investment in Pakistan.

Sharing his views, JS Global Head of Equity Research Waqas Ghani commented that the break above 180,000 reinforced "our view that improving macro stability and supportive valuations can sustain the rally." He added that 2026 returns were likely to be driven more by stock selection while broad-based gains may be limited.

Topline Securities observed that the local bourse kicked off the new year on a powerful note, as aggressive buying by local mutual funds set the tone for a decisive bullish session. Optimism around a potential rate cut in the upcoming monetary policy meeting fuelled risk appetite, driving broad-based participation across the market, it said.

The benchmark index surged to the intra-day high of 4,929 points before settling at 182,408, marking a robust gain of 3,373 points (+ 1.88%). The strong close near the day's peak underscored firm investor confidence and signalled a buoyant start to the year for equities.

Top positive contribution to the index came from United Bank, Habib Bank, Engro Holdings, MCB Bank, Engro Fertilisers and Fauji Fertiliser, which cumulatively contributed 1,853 points, Topline added.

KTrade Securities, in its market wrap, wrote that the PSX continued to rewrite history, extending its relentless bull run with yet another record close. The KSE-100 index surged 3,373 points to settle at 182,408.

The bull-run was conviction-driven and broad-based, underpinned by heavyweight sectors rather than speculative segments where commercial banks led the charge once again, supported by fertiliser, oil & gas, investment banking and cement stocks, it said.

Overall sentiment remained firmly bullish, with momentum clearly favouring large-cap, fundamentally strong names. With banks continuing to outperform and macro tailwinds staying supportive, KTrade expected the leadership to remain intact into 2026, keeping the broader trend positive and the upside bias firmly in place.

Overall trading volumes increased to 1.4 billion shares compared with the previous tally of 1.1 billion. The value of traded shares stood at Rs78 billion.

Shares of 483 companies were traded. Of these, 256 stocks closed higher, 197 declined and 30 remained unchanged.

The Bank of Punjab was the volume leader with trading in 95.5 million shares, gaining Rs0.76 to close at Rs43.09. It was followed by Pakistan International Bulk Terminal with 79.7 million shares, rising Rs1.63 to close at Rs21.78 and K-Electric with 75.2 million shares, edging down Rs0.01 to close at Rs6.34.

During the day, foreign investors sold shares worth Rs3.2 billion, the National Clearing Company reported.