The Pakistan Stock Exchange (PSX) surged to new highs on Thursday. Strong investor sentiment and improving Pakistan-US relations fueled the rally.
The KSE-100 Index touched an intraday peak of 168,619 points, gaining nearly 3,000 points. However, the session also saw a low of 165,567 points. Liquidity from mutual funds played a key role in boosting the index.
Investor Confidence and Market Drivers
Analysts believe investors are showing a clear preference for equities. For example, limited returns from other asset classes and tax incentives make stocks more attractive. As a result, mid-cap companies with growth triggers are also gaining attention.
“Investors see opportunity in equities, and FOMO is driving the rally,” said economic analyst AAH Soomro. In addition, Samiullah Tariq from Pak-Kuwait Investment Company highlighted taxation incentives as another boost for the market.
Government’s Economic Signals
Finance Minister Muhammad Aurangzeb assured that no mini-budget is planned, despite revenue shortfalls. He said IMF review talks remain on track and pending court cases will likely improve tax collections.
At the latest T-bill auction, the government raised Rs696 billion, slightly below its target. Yields rose across all maturities, with the one-month yield climbing by 41 basis points.
Inflation Pressures Continue
Inflation rose to 5.6% in September, above the government’s forecast of 4.5%. Analysts linked this increase to flood-related food supply disruptions. For the July–September quarter, inflation averaged 4.22%, lower than last year’s 9.19%.
On Wednesday, the KSE-100 Index added 146 points, closing at 165,640. Strong fundamentals and renewed confidence continue to power the rally.
