KARACHI: The Pakis­tan Stock Exchange (PSX) extended its record-breaking rally for the third consecutive session as the new fiscal year began on a bullish note, driven by easing inflation and signs of macroeconomic stability. The benchmark KSE-100 index surged to a new all-time high, crossing the 128,000 mark on Tuesday.

Ahsan Mehanti of Arif Habib Corporation attributed the rally to upbeat Consumer Price Index (CPI) data, which showed inflation at 3.4pc year-on-year in June, alongside government projections of rising exports and inflation ranging between 5-7pc in FY26. He noted that the removal of electricity duty on industrial tariffs and a rally in global crude oil prices were key drivers behind the bullish close.

According to Topline Securities Ltd, the KSE-100 index opened FY26 with strong momentum, reaching an intraday high of 2,848 points before closing at 128,199 — up 2,572 points or 2.05pc. Fauji Fertiliser Company (FFC) was the top contributor, adding 565 points to the index.

Banking stocks also led the gains as institutional investors actively reshuffled portfolios. Heavywei­ghts including United Bank Ltd, Meezan Bank, MCB Bank, Habib Bank, and Bank Al-Habib Ltd collectively contributed 1,221 points.

Index rallies 2,572 points amid easing inflation, investor confidence

On the downside, cement stocks came under pressure due to profit-taking amid weaker domestic despatch figures.

Prime Minister Shehbaz Sharif expressed gratitude to the business community and investors for their support, saying the KSE-100’s record close reflected growing confidence in the government’s economic policies. In a statement, he described the index’s performance as a testament to the strengthening and stabilising sentiment surrounding the national economy.

Ali Najib, Deputy Head of Trading at Arif Habib Ltd, noted that the market began FY26 with a sharp upward trajectory, breaking through the psychological levels of 126,000, 127,000, and 128,000. He cited reallocation of fresh funds into equities, along with economic and political stability, as major catalysts. Optimism around fiscal reforms announced in the federal budget also contributed to the rally.

In the final minutes of trading, fresh CPI data showed June inflation at 3.2pc, bringing the average for FY25 down to 4.49pc — a sharp drop from 23.41pc in FY24 and the lowest level since FY16 (2.9pc). The decline was attributed to a high base effect, lower food prices, and reduced transport costs amid falling petroleum prices.

Analysts now expect the index to challenge the next psychological milestone of 130,000, with support seen around the 125,000 level.

Despite the index gains, trading volumes dipped slightly. Market volume fell by 9.76pc to 1.03bn shares, while the traded value jumped 24.88pc to Rs44bn. Kohinoor Spinning Mills led the volume chart with 84.98m shares changing hands.

Published in Dawn, July 2nd, 2025