KEY POINTS
- KSE-100 rises 1,540 points week-on-week to 171,404
- SBP’s 50bps rate cut to 10.5% drives early momentum
- Index hits a fresh all-time high at 171,961 before Friday pullback
- Current account swings to $100 million surplus in November
- Average daily turnover declines despite index gains
ISLAMABAD: The Pakistan Stock Exchange (PSX) extended its upward momentum during the outgoing week, with the benchmark KSE-100 index rising 1,540 points, or 0.91 per cent week-on-week, to close at 171,404, according to PSX data.
The rally was primarily driven by the State Bank of Pakistan’s surprise 50-basis-point cut in the policy rate to 10.5 per cent, supported by improving external sector indicators.
Weekly market performance
The benchmark index began the week on a strong footing, finally closing above the key 170,000-point level on Monday after multiple unsuccessful attempts. The KSE-100 settled at 170,741, up 877 points, or 0.52 per cent.
Despite positive expectations following the SBP’s policy decision, the market delivered an unexpected move on Tuesday, closing in the red at 170,447, down 294 points, or 0.17 per cent.
Wednesday saw a consolidation phase, with the index moving in both directions before ending almost flat at 170,314, lower by 133 points.
Bullish sentiment returned on Thursday as the PSX posted a strong rally, pushing the benchmark to a fresh all-time high of 171,961 after a gain of 1,646 points, or 0.97 per cent.
The week ended on a cautious note, with profit-taking ahead of the rollover week dragging the index down by 556 points on Friday to close at 171,404.
Traders’ view: rate cut boosts sentiment
Arif Habib Ltd stated that the KSE-100 index increased from 169,865 last week to 171,404 this week, posting a gain of 1,540 points, or 0.91 per cent.
The brokerage house attributed the positive sentiment largely to the SBP’s 50-bps policy rate cut announced at the start of the week.
AHL noted that Pakistan recorded a current account surplus of $100 million in November 2025, compared to a deficit of $291 million in October.
The surplus, however, was lower than the $709 million surplus recorded in November last year. On a cumulative basis, the current account posted a deficit of $812 million in 5MFY26.
Flows, auctions and macro indicators
According to AHL, net foreign direct investment amounted $180 million in November, broadly in line with the inflows of $179 million in October.
During the week, the government raised Rs 445 billion through a T-bill auction, exceeding the target of Rs 400 billion, amid a total bid of Rs 2.49 trillion.
Cut-off yields declined by 25 to 70 basis points across all tenors in the first Pakistan Investment Bond auction held after the rate cut. The largest allocation, amounting to Rs 116.9 billion, was made in the two-year PIB.
Power generation in November was 8,050 gigawatt-hours, below the reference generation of 8,133 GWh, resulting in a negative fuel cost adjustment.
Auto financing rose 35.5 per cent year-on-year to Rs 318 billion in November, compared with Rs 235 billion in the same month last year.
During November, industry urea offtake reached its highest level for any November since 2010, supported by higher manufacturer discounts and strong Rabi season demand.
As a result, industry urea inventories declined to 1.14 million tons from 1.40 million tons in October.
SBP-held foreign exchange reserves increased by $1.3 billion to $15.9 billion, while commercial bank reserves rose by $0.2 billion to $5.2 billion, taking the total above $21 billion in months.
Market outlook and volumes
Syed Danyal Hussain of JS Global said the KSE-100 extended its upward momentum during the week, closing higher by about 0.9 per cent week-on-week, even as average daily turnover declined by around 5 per cent.
He said sentiment improved after the SBP highlighted stable inflation dynamics, moderate global commodity prices, and well-anchored inflation expectations under a prudent monetary stance.
On the external front, Hussain noted that the current account surplus in November was largely driven by a 15 per cent decline in imports.
However, the cumulative current account balance for 5MFY26 remained in deficit, contrasting with a surplus recorded in the same period last year.
He added that large-scale manufacturing output showed signs of recovery, rising 8.3 per cent year-on-year in October and lifting cumulative growth for 4MFY26 to 5 per cent.
In contrast, foreign direct investment declined 25 per cent year-on-year to $927 million during 5MFY26.
Separately, Pakistan approached the Asian Development Bank to seek additional financing to refinance Rs 1.7 trillion in power-sector circular debt on more favourable terms, which might influence investor sentiment ahead.
