The Pakistan Stock Exchange (PSX) saw a significant rebound on Friday, with the benchmark KSE-100 Index climbing 3,642.5 points, or 2.01%, to close at 185,098.83 points. This sharp recovery was driven by improved market sentiment following reports of de-escalation between the US and Iran, alongside expectations of a forthcoming cut in the policy rate by the State Bank of Pakistan (SBP).
Market Activity and Key Contributors
Trading volume reached 959.5 million shares, with a total session value of Rs69.3 billion. Analysts noted that local institutional buying played a major role in the positive momentum. Leading contributors to the index’s gains included OGDC, PPL, HUBC, ENGROH, FFC, UBL, and MEBL, which together added approximately 1,725 points to the overall increase.
Intraday Movements
The index touched an intraday high of 184,787.27 points, up by 3,330.94 points (1.84%), and a low of 182,559.69 points, still reflecting a gain of 1,103.36 points (0.61%).
Market Sentiment and Expert Insights
Huzaifa Riaz, Director at Mayari Securities, highlighted the impact of the US-Iran de-escalation news on market confidence. He also pointed to expectations of a 50 basis points cut in the upcoming monetary policy as a factor encouraging risk-on sentiment among investors.
Ahsan Mehanti, Managing Director and CEO of Arif Habib Commodities, emphasized the bullish activity triggered by these developments and speculations of further policy easing amid declining government bond yields.
Monetary Policy Expectations
A recent Topline Research survey conducted ahead of the SBP Monetary Policy Committee meeting on January 26 revealed that 80% of participants anticipate a rate cut. Among them, 56.4% expect a 50 basis points reduction, 15.4% foresee a 100 basis points cut, while smaller percentages predict other adjustments. The SBP had previously reduced rates by 50 basis points in December 2025.
Foreign Exchange Reserves and Economic Outlook
SBP reserves increased by $16 million to $16.072 billion in the week ending January 9, bringing total liquid reserves to $21.248 billion, including commercial bank reserves. The central bank noted ongoing foreign exchange purchases supported by steady remittances and a balanced current account. From June 2024 to September 2025, net market purchases totaled $9.7 billion.
The SBP projects the fiscal year 2026 current account deficit to remain between 0 and 1% of GDP, with reserves expected to reach $17.8 billion by June 2026, supported by planned official inflows.
Previous Session Recap
On Thursday, the KSE-100 Index had declined by 1,113.48 points (0.61%) to close at 181,456.34 points, after fluctuating between 183,717.54 and 180,783.63 during the session.
