KARACHI: The Pakis_tan Stock Exchange (PSX) extended its overnight recovery rally on Tuesday, as attractive valuations continued to draw buying interest.
Equity investors viewed the policy rate hike, aimed at curbing inflation stemming from the Middle East conflict, as a balancing act. The benchmark index consequently settled above 164,000 points.
Topline Securities Ltd said the index staged a strong recovery, gaining 1,428.73 points, or 0.88 per cent, to close at 164,467.20. The benchmark witnessed renewed buying interest despite the State Bank of Pakistan’s 50bps policy rate hike to 12pc, as broad-based buying across key sectors supported the market’s upward momentum.
Buying interest remained prominent in the cement, automobile, and banking sectors, with Fauji Cement Company, Maple Leaf Cement Factory, Ghandhara Automobiles Ltd, Ghandhara Industries Ltd, Pakistan International Bulk Terminal, and Cnergyico PK among the stocks in focus amid earnings announcements and improved profitability.
Index reclaims 164,000 as investors view rate hike as balancing act
MCB Bank, Fauji Fertiliser, United Bank, Pakistan Petroleum, and National Bank led the index’s gains, adding about 490 points to the benchmark and reflecting strong support from heavyweight stocks.
Investor participation strengthened as trading volume rose6.90pc to 402m shares, while traded value increased 11.59pc to Rs18.06bn.
Ali Najib, Deputy Head of Trading at Arif Habib Ltd, said the market opened strongly, stayed positive throughout the session, and closed near its intraday highs, reclaiming the 164,000 level.
The rally was driven mainly by investor relief after the SBP’s moderate 50bps policy rate hike, lower than the aggressive 100bps increase some market participants had anticipated given the current geopolitical situation and elevated international oil prices and their impact on domestic inflation.
Sentiment was further bolstered by easing geopolitical tensions amid diplomatic efforts by the ‘Makkah Pact’ countries—Pakistan, Saudi Arabia and Türkiye—as officials held high-level talks in Iran to explore a peaceful resolution to the ongoing US-Iran conflict.
On the macroeconomic front, the SBP reported cumulative net foreign exchange interventions of $17.2bn between June 2024 and July 2026, including $863m in July alone, highlighting its continued management of foreign exchange market liquidity and reserve accumulation.
Analysts expect a positive market bias, supported by relief that the SBP’s rate hike was smaller than feared and diplomatic efforts to ease US-Iran tensions. However, geopolitical uncertainty, rising oil prices and shifting macroeconomic conditions may keep investors cautious. Selective buying is likely to drive near-term momentum amid continued volatility.
Published in Dawn, October 28th, 2026
