Late rally propels PSX above 185,000

KSE-100 index posts modest weekly gain on rate cut hopes

KARACHI:

The Pakistan Stock Exchange (PSX) wrapped up the outgoing week on a firm footing as a late-session rally helped the benchmark KSE-100 index post modest weekly gains, snapping days of subdued trading amid geopolitical concerns.

Improved liquidity conditions, easing regional tensions and growing expectations of a policy rate cut in the upcoming monetary policy announcement lifted investor sentiment on Friday, allowing the index to close the week above the 185,000 level despite lingering macro and external headwinds.

On a day-on-day basis, the PSX commenced the week on a negative note as the KSE-100 extended losses, closing at 182,384, down 2,026 points (-1.10%). Consolidation continued on Tuesday as well, with the index closing at 183,951, up 1,567 points (+0.86%).

On Wednesday, the consolidation phase persisted, where the market closed at 182,570, down 1,382 points (-0.75%). The PSX witnessed another negative session on Thursday as the index ended the day at 181,456, down 1,114 points (-0.61%). The bourse closed the week on a highly bullish note, when it settled at 185,099, up 3,643 points (+2.01%).

Arif Habib Ltd (AHL), in its weekly review, said the KSE-100 index remained largely range bound over the week, closing slightly up at 185,099 with a gain of 689 points (+0.4% week-on-week). Market sentiment stayed subdued for most of the week as escalating geopolitical uncertainty kept investors cautious. However, the bourse staged a late rally on Friday, driven by fresh liquidity, easing geopolitical tensions and strengthened expectations of a policy rate cut.

The government, through the Pakistan Investment Bond (PIB) auction, raised Rs488 billion against the target of Rs450 billion. Cut-off yields dropped by 59-70 basis points across all tenors.

Auto sales (cars, light commercial vehicles, vans and jeeps) declined by 14% month-on-month (MoM) to 13.3k units during Dec'25. However, on a year-on-year (YoY) basis, they increased by 35%. Cumulatively, in 1HFY26, the auto sales rose by 46% YoY to 88k units, mentioned AHL.

Oil production increased 1.1% WoW to 65,444 barrels per day, led by higher output at northern fields amid reduced curtailment. Gas production rose to 3,012 million cubic feet per day, the highest since mid-Mar'25, driven by increased supply to fertiliser and power sectors and reduced northern curtailment.

Prices of petrol and high-speed diesel remained steady at Rs253.17 per litre and Rs257.08/litre, respectively. The State Bank-held foreign reserves rose by $16 million to $16.1 billion. Meanwhile, the Pakistani rupee appreciated slightly against the US dollar, strengthening 0.03% WoW to close at Rs279.95/$, added AHL.

Syed Danyal Hussain of JS Global noted that the KSE-100 index recovered strongly in the final session of the week after remaining under pressure earlier amid heightened regional geopolitical tensions, closing at 185,099 points (+0.4% WoW). On the macro front, large-scale manufacturing recorded its eighth consecutive YoY growth, rising 10.4% in Nov'25, lifting 5MFY26 growth to 6%. On the external financing side, Pakistan requested the UAE to roll over $2.5 billion deposits for a further two years, while seeking a near 50% reduction in the financing rate on an outstanding $450 million loan.

Meanwhile, the World Bank, in its latest assessment, projected Pakistan's GDP growth at 3% for FY26. In other news, Hussain mentioned, bank lending to the private sector slumped 79% YoY to Rs395 billion in 1HFY26. In contrast, government borrowing remained strong, with the latest PIB auction raising Rs546 billion against the target of Rs450 billion, while cut-off yields declined by 59 to 70 basis points across different tenors.

Furthermore, the government reduced profit rates on National Savings Schemes by 23 to 50 basis points across various instruments. Auto numbers yet again recorded strong YoY growth, with four-wheeler volumes showing a growth of 31% in Dec'25, taking 1HFY26 growth to 45%, said Hussain.