The Pakistan Stock Exchange pushed deeper into uncharted territory on Monday, with the benchmark KSE-100 index soaring past the 133,000 mark in intraday trade. This fresh milestone underscores robust investor confidence driven by a mix of supportive fiscal measures, cooling inflation, and stable macroeconomic conditions that continue to underpin a bullish sentiment across the equity market.
At around 11:20 am, the KSE-100 index was up by a significant 1,771.48 points or 1.34 percent, reaching 133,720.54 points compared to the previous close of 131,949.06 points. This surge extended the market’s remarkable rally into a seventh consecutive session, keeping intact the momentum that saw the index post a hefty 6.1 percent gain just last week as Pakistan began its new fiscal year.
Market experts point to the recently passed federal budget and its relatively market-friendly stance on equity taxation as a major catalyst for this ongoing bullish streak. Awais Ashraf, director of research at AKD Securities, said that the favourable tax regime for stocks, combined with Pakistan’s improving macroeconomic narrative and declining inflation, is attracting capital toward equities over alternative asset classes. He added that monetary easing — underpinned by falling inflation, fiscal discipline, a stronger external account position, and an emphasis on long-overdue structural reforms — continues to keep stocks in the spotlight.
Yousuf M. Farooq, research director at Chase Securities, observed that the market has clearly entered what he termed “Phase 2 of the bull run.” According to him, this phase is characterized by increased participation from retail investors, surging trading volumes, and widespread gains across multiple sectors. Farooq pointed out that the Finance Act 2025-26 was approved last week without any major surprises, providing clarity that markets needed. Moreover, relative geopolitical calm, positive developments around resolving Pakistan’s chronic circular debt issue, and the potential for a new trade agreement with the United States have further strengthened investor sentiment.
Despite the enthusiasm, Farooq advised caution, urging retail investors to remain focused on long-term fundamentals, align investments with their individual risk appetites, and avoid overreacting to short-term swings typical of any extended bull market. He acknowledged that speculative pockets have emerged — a natural feature of prolonged market rallies — but also noted that overall valuations still appear reasonable. As such, he expects forward returns to moderate compared to the outsized gains recorded over the last two years.
Supporting this market optimism is a backdrop of improving economic metrics. Pakistan’s headline inflation eased to a nine-year low of 3.2 percent in June, down from 3.5 percent a month earlier. Meanwhile, the country’s trade deficit narrowed to $2.3 billion for June, reflecting a 9 percent month-on-month and 3 percent year-on-year decline. For the full fiscal year 2025, however, the trade deficit stood at $26.3 billion, representing a modest 9 percent increase over FY24.
Taken together, the PSX’s new highs are being underpinned by more than just speculative enthusiasm; they reflect a combination of clearer fiscal direction, an easing cost environment, and growing optimism around Pakistan’s macroeconomic path. As institutional and retail investors alike continue to pour funds into equities, the market appears well-poised to maintain its positive trajectory, provided economic fundamentals stay supportive and reforms keep advancing.