Bulls continued their reign over the trading floor at the Pakistan Stock Exchange (PSX) on Wednesday as shares scaled the 130,000-point barrier to reach a new high after climbing by 2,100 points.

The benchmark KSE-100 index opened on a positive note, rising by 1,430.07 points (1.12 per cent) to reach 129,629.49 points at 10:07am, from the previous close of 128,199.42 points.

Shares then rose further to reach 130,344.03 points at close, gaining 2,144.61 points (1.67pc) from yesterday.

The PSX extended its record-breaking rally for the fourth consecutive session today, which analysts attributed to easing inflation and signs of macroeconomic stability.

Awais Ashraf, director of research at AKD Securities, said the increase in tax rate on income from debt securities, along with a change in the taxation structure for mutual funds to proportionate holdings of equities and fixed income, has resulted in inflows to equities from fixed income.

“Significant reduction in inflation rate — fell to a low of nine years — with improved outlook has increased the odds for further reduction in policy rate, which will help in continuation of flows towards equities,” he said.

The annual inflation rate has dropped sharply to a nine-year low of 4.49pc during the fiscal year 2024-25 from 23.41pc in the previous year. Pakistan is currently experiencing disinflation, which reflects a slowdown in the rate of inflation, as opposed to deflation, which indicates a general decline in overall price levels.

Optimism around fiscal reforms announced in the federal budget also contributed to the rally.

“Continuation of monetary easing due to falling inflation driven by fiscal discipline, strong external account and focus on structural reforms would keep equities in the limelight,” Ashraf said a day ago.

In a recent statement, Prime Minister Shehbaz Sharif asserted the KSE-100’s record close reflected growing confidence in the government’s economic policies. He described the index’s performance as a testament to the strengthening and stabilising sentiment surrounding the national economy.