KARACHI: The equity market sustained its robust advance on Tuesday, testing fresh record highs as investor risk appetite remained firm, propelling the benchmark index past the 166,000 mark for the first time in history.
The Pakistan Stock Exchange’s (PSX) KSE-100 Index settled at 165,493.58 points, reflecting a gain of 1,645.90 points, or 1%, from its previous close. During the session, the index climbed to an intraday high of 166,556.29, soaring by 2,708.61 points, or 1.65%.
Catalysts Driving Market Confidence
The record-breaking rally, which extended Monday’s momentum, is being credited to a convergence of domestic financial solutions and improved external relations.
“Stocks reached a new all-time high at the quarter-end close as investors weighed upbeat Pak–US relations,” stated Ahsan Mehanti, Managing Director and CEO of Arif Habib Commodities. “Resolve over the Rs1.225 trillion circular debt, and rupee stability on Saudi FDIs commitments following the Pak–Saudi defence pact played a catalyst role in record bullish activity at PSX,” he added.
Investor sentiment remains buoyant, underpinned by high-level engagement with the U.S., a landmark circular-debt financing arrangement with commercial banks, and renewed optimism surrounding future Saudi economic involvement.
Outlook, Risks, and External Views
Analysts project that the near-term bullish momentum is likely to persist, particularly in the banking, energy, and power sectors. However, they caution that adherence to IMF conditionalities and the consistency of external funding flows remain key risks to the economic outlook.
Sentiment has also been supported by efforts to broaden external financing, including planned Panda bonds and additional commercial borrowings. The State Bank of Pakistan reported a modest $22 million increase in foreign exchange reserves to $14.4 billion (as of September 19, 2025), with the rupee firming 0.03% to Rs281.37 per U.S. dollar.
Separately, the Asian Development Bank (ADB) stated in its September 2025 outlook that Pakistan’s real GDP growth is expected to hit 3% in FY26, though inflation could potentially rise to 6%. The ADB credited improved macro conditions and progress under the IMF EFF (since Oct 2024) but cautioned that policy consistency and climate resilience are vital, noting that recent flood damage could weigh on growth even as external buffers and business confidence improve following the US-Pakistan trade agreement.
