KARACHI: Bulls made a strong comeback at the Pakistan Stock Exchange (PSX) on Friday, with the benchmark KSE-100 Index surging more than 3,600 points as investor sentiment improved amid easing regional geopolitical tensions and growing expectations of a policy rate cut by the State Bank of Pakistan (SBP).
According to data available on the PSX website, the market opened with strong bullish momentum and maintained its upward trajectory throughout the session. During intraday trading, the benchmark index touched a high of 185,208.98 points, reflecting broad-based buying interest across multiple sectors.
By the end of the session, the KSE-100 Index closed at 185,098.83 points, registering a gain of 3,642.50 points, or 2.01 percent, compared to the previous close of 181,456.33 points. The sharp rebound marked one of the strongest single-day gains in recent weeks, following heightened volatility earlier in the week.
Buying activity was seen across key sectors, including automobile assemblers, cement, commercial banks, fertiliser, oil and gas exploration companies, oil marketing companies, and power generation stocks. Heavyweight stocks played a central role in driving the rally, with HUBCO, MARI, OGDC, POL, PPL, PSO, SSGC, SNGPL, MCB, MEBL, NBP, and UBL all closing in positive territory.
Market participants attributed the rally primarily to expectations of an easing in monetary policy at the upcoming meeting of the SBP’s Monetary Policy Committee (MPC), scheduled for January 26, 2026. Sentiment was further supported by the decline in yields observed at the most recent Pakistan Investment Bonds auction, which reinforced expectations of a possible rate cut.
According to a Monetary Policy Survey conducted by Topline Pakistan Research, 80 percent of market participants expect the SBP to cut interest rates at its first MPC meeting of 2026. Among those anticipating a cut, 56.4 percent expect a reduction of 50 basis points, while 15.4 percent foresee a deeper cut of 100 basis points. Smaller segments expect reductions of 25 basis points, 75 basis points, or no change, indicating broad consensus around an accommodative policy shift.
Friday’s strong performance followed a volatile session on Thursday, when the market closed sharply lower due to sustained selling pressure. The index had ended Thursday’s session at 181,456.34 points, down 1,113.48 points or 0.61 percent, as investors remained cautious amid global uncertainty.
Additional support for market sentiment came from the federal government’s decision to keep petroleum prices unchanged for the next fortnight starting January 16, 2026. High Speed Diesel continues to be priced at Rs257.08 per litre, while petrol remains unchanged at Rs253.17 per litre, easing concerns over near-term inflationary pressures.
On the global front, investor confidence improved after tensions related to a potential US action against Iran showed signs of easing. Reports that Washington had stepped back and withdrawn some military personnel from its bases in the Middle East helped calm fears of immediate escalation and its possible spillover into global markets.
Asian equity markets also traded higher, supported by renewed momentum in artificial intelligence-related stocks. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.5 percent, staying close to record highs, while strong earnings from Taiwanese chipmaker TSMC further lifted regional sentiment. Wall Street futures edged higher in Asian trading, with Nasdaq and S&P 500 futures posting modest gains.
Meanwhile, oil prices remained under pressure, while gold and silver prices declined as US President Donald Trump signalled a wait-and-see approach regarding developments involving Iran. European equity futures were mixed after major European markets closed at record highs in the previous session.
Overall, market participants said the sharp rebound at the PSX reflected improved risk appetite, expectations of monetary easing, and relief over geopolitical developments, though they cautioned that volatility could persist ahead of the SBP’s policy decision later this month.
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