Pakistan Stock Exchange crosses 189,000 points for the first time as investors bet on an interest rate cut amid easing inflation and a stable rupee.
Benchmark Index Extends Record-Breaking Rally
The Pakistan Stock Exchange (PSX) pushed to a fresh all-time high on Friday as renewed buying in the final trading session of the week lifted the benchmark index above the 189,000-point mark.
After moving in a narrow band for much of the morning, the KSE-100 index gathered strong upward momentum in the second half of the day. It eventually closed at 189,166.83 points, up 1,478.67 points, or 0.79 percent, marking another record finish for the market.
Brokerage house Arif Habib Ltd (AHL) noted that the index remained range-bound between 187,000 and 188,000 points during the first session before late buying took charge and drove the benchmark to a historic close.
Investors Position for Possible Interest Rate Cut
The rally came ahead of the State Bank of Pakistan’s monetary policy announcement due on Monday, with investors largely positioning for another cut in the policy rate.
The benchmark rate currently stands at 10.5 percent. Expectations for a reduction of 50 to 100 basis points have strengthened on the back of easing inflation, a more stable rupee and rising foreign exchange reserves.
At the most recent treasury bills auction on 21 January, the government reduced cut-off yields across most tenors to single digits for the first time in four years. That move reinforced market conviction that the central bank is preparing to lower borrowing costs to support growth.
On the inflation front, the Sensitive Price Index for the week ended 22 January rose 4.18 percent year-on-year but fell 0.48 percent week-on-week, signalling some cooling in short-term price pressures.
Fertiliser Stocks and FFC Speculation Lead the Charge
Fauji Fertiliser Company (FFC) was the standout performer of the day, with speculation about a potential stock split driving aggressive buying interest.
According to AHL, FFC alone added 1,514 points to the KSE-100 index, underscoring how concentrated the day’s gains were in a handful of large-cap names. The move was fuelled by optimism over earnings, payouts and possible corporate actions ahead of the company’s upcoming board meeting to approve annual results for the year ended 31 December 2025.
Engro Fertiliser, Pakistan Petroleum Ltd, Hub Power and Engro Corporation also contributed positively, collectively adding around 690 points to the index as investors rotated into blue-chip stocks perceived to benefit from a lower interest rate environment.
On the other side, some names came under selling pressure. Pioneer Cement, Oil and Gas Development Company, United Bank, National Bank and Pakistan Petroleum collectively shaved 478 points off the index as traders booked profits and adjusted positions.
Volumes Ease but Traded Value Jumps
Market participation cooled from recent highs, with overall traded volumes slipping below the one-billion-share mark to 875.49 million shares. Despite the lower share count, the value of shares traded increased to Rs 58.5 billion, indicating that activity remained focused in higher-priced and large-cap stocks.
K-Electric led the volume chart once again, with 141.4 million shares changing hands as retail and institutional investors continued to trade actively in the power utility.
Earlier in the week, sentiment on the trading floor had been weighed down by disappointing current account data. Pakistan posted a current account deficit of USD 244 million in December 2025, reversing surpluses of USD 454 million in December 2024 and USD 98 million in November 2025.
For the first half of FY26, the current account recorded a deficit of USD 1.174 billion, compared with a surplus of USD 957 million in the same period a year earlier. The country also saw a net foreign direct investment outflow of USD 135 million in December, raising some concerns about external financing.
Outlook Ahead of Monetary Policy Committee Meeting
Despite the external sector worries, equity investors ended the week on a bullish note, betting that the combination of lower yields, moderating inflation and a stable currency will keep stocks attractive relative to fixed-income instruments.
Topline Securities observed that while the market remained range-bound in early trade, bulls eventually took control, led by FFC on optimism about earnings, dividend payouts and corporate developments ahead of its results announcement.
All eyes will now be on the State Bank’s Monetary Policy Committee meeting on Monday. A rate cut in line with market expectations could reinforce the current risk-on mood and encourage further re-rating of equities. However, any surprise pause or a smaller-than-expected adjustment might trigger short-term volatility and profit-taking after the index’s powerful run to new highs.
For now, the PSX has signalled strong investor confidence by scaling above 189,000 points, extending a record-breaking rally that continues to set new benchmarks for Pakistan’s capital market.
