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KARACHI: The Pakistan Stock Exchange (PSX) kicked off the week with a surge in investor confidence, with the KSE-100 index settling above the 170,000-point milestone for the first time on Monday. The market’s strong performance came despite expectations of a status quo in interest rates following the IMF’s suggestion to tighten liquidity.
However, in a surprise move after the close of trading, the State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) cut the policy rate by 50 basis points to 10.50 per cent, breaking its long-standing hold since May. Most market participants had anticipated no change.
The MPC’s statement highlighted that inflation had remained within the target range of 5-7pc during the first five months of FY26, while economic activity showed signs of strengthening. With this in mind, the committee noted the room to reduce the policy rate in a bid to support sustainable economic growth. SBP also revised its GDP growth forecast for FY26 to the upper half of the projected 3.25-4.25pc range.
According to Topline Securities, the KSE-100 index closed at an all-time high of 170,741.35 points, marking a gain of 876.82 points, or 0.52pc. The index briefly touched an intraday high of 171,001 before profit-taking trimmed some gains, leaving it at 170,292 points by session’s end.
Ali Najib, Deputy Head of Trading at Arif Habib Ltd, attributed the market’s bullish trend to optimism surrounding the resolution of Pakistan’s gas circular debt, which spurred strong buying in energy stocks early in the session.
Key drivers of the rally included Pakistan Petroleum, Systems Ltd, Maple Leaf Cement, National Bank, and United Bank, collectively contributing around 651 points to the index.
Market participation saw an uptick, with traded volume rising 3.74pc to 904 million shares, while total turnover climbed to Rs47.7bn. Pakistan International Bulk Terminal topped the volume chart with 123 million shares.
With the unexpected rate cut, analysts predict the PSX’s positive momentum could accelerate further, pushing the benchmark to new highs in the coming days.
Published in Dawn, December 16th, 2025
