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• Strong economic optimism fuels record rally, driven by institutional buying
• Index settles above 179,000-point barrier
• Premier commends economic policies for restoring investor confidence
KARACHI: The Pakistan Stock Exchange (PSX) extended its remarkable rally into the final session of the week, as aggressive buying by investors, spurred by rising economic optimism, propelled the KSE-100 index to a historic close near the 179,500-point threshold on Friday.
The index finished at 179,034.93 points, up 2,679.44 points, or 1.52 per cent.
Prime Minister Shehbaz Sharif expressed his satisfaction with the market’s performance, emphasising that the crossing of the 179,000-point mark reflected the growing confidence of the business community and investors in the government’s economic policies.
“The country’s development journey continues, thanks to the hard work of the economic team,” the premier remarked, commending efforts to steer Pakistan towards a path of sustained growth.
Ali Najib, Deputy Head of Trading at Arif Habib Ltd (AHL), attributed the rally to continued domestic institutional buying, with broad participation across blue-chip stocks, reinforcing the bullish trend.
The PSX surged past the 177,000, 178,000, and 179,000-point thresholds in a single session. The continued upward momentum is supported by improved macroeconomic indicators and expectations of stronger corporate earnings in the coming weeks.
The rally has been ongoing since July 2023, when Pakistan entered an IMF Stand-By Arrangement, and the bullish trend carried over into 2026.
Mr Najib pointed to a combination of factors driving the surge, including easing inflation (down to 5.6pc) and a surprise 50-basis-point cut in the policy rate, bringing it to a near three-year low in December. These developments have prompted investors to shift funds from other assets into the equity market.
Additionally, the country’s industrial recovery, a boost in large-scale manufacturing, and a 3.71pc GDP expansion in 1QFY26 have strengthened the economic outlook.
The rally has been broad-based, with heavy institutional participation in key sectors, including banking, energy, and pharmaceuticals. The market’s positive outlook on government reforms, fiscal stability, and the long-awaited privatisation of the national airline also contributed to investor confidence.
In terms of macroeconomic performance, the Sensitive Price Index (SPI) showed a 2.41pc increase year-on-year, while the country’s trade deficit widened to $3.7bn in December. Exports fell to $2.3bn, while imports climbed to $6bn for the month.
On the corporate front, the government is reportedly set to impose a 5pc levy on mobile phone and electronic device imports under the proposed 2026-33 policy. This move is seen as favourable for local assemblers, with Airlink Ltd, a key player in the sector, rising 1.21pc.
Topline Securities Ltd Chief Executive Mohammed Sohail attributed the bullish spell to aggressive institutional buying helping the market set fresh record in new year. Robust urea sales numbers for December and expectations of resolution of gas circular debt boosting investor sentiment, he added.
Among the biggest contributors to the index were United Bank, Engro Fertiliser, Engro Holdings, Pakistan Petroleum, Oil and Gas Development Company, and Fauji Fertiliser, which collectively contributed 1,663 points.
Despite the record-breaking session, market participation showed signs of weakness, with trading volumes falling 20.64pc to 1.1 billion shares. However, the traded value surged by 32.86pc to Rs64.34 billion, reflecting strong investor interest despite lower volumes.
Published in Dawn, January 3rd, 2026
