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Pakistan Stock Market KSE-100 Index Hits Record high Amid Economic Shifts
Karachi, July 6, 2025 – The Pakistan Stock Exchange (PSX) witnessed a historic surge as the KSE-100 Index closed at an all-time high of 131,949.06 points. This remarkable Pakistan stock market performance, a 6.1 percent increase, marks a strong start to the new fiscal year and reflects growing investor confidence.
Market Drivers: Funds Re-Allocation And Macroeconomic Stability
Analysts attribute this rally to substantial institutional buying and a strategic reallocation of funds away from fixed-income instruments.The impetus for this shift stems from the Finance Act 2025-26, which increased the withholding tax on savings and fixed deposits to 20 percent, while maintaining a lower 15 percent tax on equity investments.
This created an environment where equities became more attractive amid declining yields.
Trading Volume surges Alongside Index Growth
The KSE-100 Index gained 7,570 points over the week, climbing from a previous close of 125,627.31. Average daily trading volumes increased by 31.4 percent, reaching 967 million shares. Average traded value also rose by 33 percent to Rs41.5 billion. In dollar terms, the average daily turnover reached $145.7 million, a 31.9 percent increase week-on-week.
Improved macroeconomic indicators further bolstered market sentiment.Inflation eased to 3.2 percent in June, down from 3.5 percent in May. The trade deficit narrowed to $2.3 billion for June, a 9 percent decrease month-on-month and a 3 percent decrease year-on-year. The full-year trade deficit for FY25 stood at $26.3 billion, a 9 percent increase from FY24.
State Bank’s Foreign Exchange Reserves see Notable Boost
foreign exchange reserves held by the State Bank of Pakistan (SBP) increased by $3.66 billion,reaching $12.73 billion for the week ending June 27. This marks the second-largest weekly increase on record. Total reserves reached $14.5 billion by the end of June, aligning with the SBP’s year-end target.
The Pakistani Rupee remained relatively stable, closing the week at Rs283.97 against the dollar, showing a minimal decrease of two paise.
Sector Performance: Winners and Losers
Commercial banks spearheaded the rally, contributing 4,561 points to the KSE-100 index. Other significant contributors included fertilizer (722 points), technology and communication (438 points), exploration and production (401 points), and pharmaceuticals (187 points).
Conversely, the cement (-136 points), glass and ceramics (-65 points), refinery (-6 points), and woollen (-1.5 points) sectors experienced negative contributions.
Top Performers and Underperformers
United Bank (1,597 points),Mcb Bank (653 points),Habib Bank (462 points),and Bank Al Habib (425 points) were among the top positive contributors to the index. Maple Leaf Cement (-44.1 points),Lucky Cement (-41 points),Ghani Glass (-39 points),and Pioneer Cement (-30 points) weighed down the index.
Foreign Investors Show Caution
Foreign investors remained net sellers for the second consecutive week, offloading equities worth $15.3 million, compared to $11.8 million the previous week. The highest selling activity was observed in commercial banks ($4.5 million) and miscellaneous sectors ($4 million). Local mutual funds and companies, however, were net buyers, investing $22.1 million and $12.2 million, respectively.
regulatory and Economic Developments
The National Electric Power Regulatory Authority (Nepra) reduced electricity tariffs by Rs1.14/kWh to Rs31.59/kWh. The Oil and Gas Regulatory Authority (Ogra) increased gas prices across residential and industrial categories, effective July 1. A New Energy Vehicle (NEV) levy was also introduced, leading to price increases for various car models.
Cement sector dispatches for FY25 totaled 46.2 million tonnes, a 2 percent year-on-year increase, driven by stronger exports. Domestic sales declined by 2.4 percent to 38.6 million tonnes. The oil marketing sector saw a 7 percent rise in product offtake, reaching 16.3 million tonnes for the fiscal year.
KSE-100 Dominates Asset Class Returns
The KSE-100 emerged as the best-performing asset class in FY25, delivering an notable 60.15 percent return. This significantly outperformed T-Bills (21.44 percent), Defence Savings Certificates (12.61 percent), bank deposits (12.60 percent), Pakistan Investment Bonds (11.97 percent), gold (4.52 percent), and the Pakistani rupee, which appreciated by 1.95 percent against the U.S. dollar.
Aggressive monetary easing, improved liquidity, and the unlocking of value in key sectors drove this strong equity market performance, boosting investor confidence in Pakistan’s capital markets.
