Pakistan Stock Exchange Stages Strong Rebound with Significant Gains
The Pakistan Stock Exchange (PSX) witnessed a robust recovery during Friday's trading session, with the benchmark KSE-100 index surging impressively. The index climbed over 1,800 points to close above the 184,100 level, marking a notable turnaround after touching an intraday high of 186,619 points. This upward movement was primarily fueled by substantial buying activity in index-heavy stocks, reflecting renewed investor confidence across several key sectors.
Drivers Behind the Market Rally
Market analysts attributed the sharp rebound to a combination of improving geopolitical signals and easing macroeconomic concerns. Nawaz Ali of JS Global commented, "The index took a breather today, surging to an intraday high of 186,619 points; however, gains were pared back due to profit-taking at elevated levels." At the close of trading, the KSE-100 index posted a gain of 1,836.37 points, or 1.01%, settling at 184,174.49.
Ali Najib, Deputy Head of Trading at Arif Habib Limited (AHL), highlighted that market sentiment improved following positive geopolitical developments. Official statements from both the United States and Iran signaled a willingness to engage in dialogue and avoid further escalation, which provided a boost to investor morale. Despite this optimism, JS Global noted that investor sentiment remained cautious amid ongoing regional tensions, recommending a wait-and-see approach as any adverse geopolitical development could negatively impact market dynamics.
Key Contributors and Sectoral Performance
In the final session of the week, 72 shares advanced while 28 declined. The top positive contributions to the index came from:
- LUCK PA (+3.55%)
- ENGROH PA (+2.72%)
- UBL PA (+1.46%)
These stocks, along with MEBL, MARI, and HBL, cumulatively added 1,197 points to the index. Conversely, the biggest drags included FFC PA (-1.48%), MCB PA (-1.36%), and POL PA (-1.43%). Value-wise, trading was dominated by FFC, PPL, OGDC, NBP, and PTC.
Investor interest was particularly observed in the textile sector after the prime minister announced a 300-basis-point cut in the Export Finance Scheme rate to 4.5%. This policy move aimed to support exporters and stimulate economic activity, contributing to the positive market sentiment.
Market Statistics and External Factors
Total traded volume stood at 805.14 million shares, with the value of shares traded amounting to Rs50.83 billion. Shares of 484 companies were traded, resulting in 258 closing higher, 175 lower, and 51 unchanged. K-Electric led volumes, followed by Hascol Petrol and WorldCall Telecom. Notably, foreign investors sold shares worth Rs1.3 billion, as reported by the National Clearing Company.
AHL noted a recovery on Friday, with the market posting a 1.01% day-on-day gain, which helped trim weekly losses to 2.76%. Looking ahead, AHL expects the market to trade within the 180,000-190,000 range in the coming week.
Economic Indicators and Outlook
On the economic front, headline inflation for January 2026 is projected to settle at 5.8% year-on-year, slightly higher than the 5.6% recorded in December 2025 and significantly above the 2.4% from January 2025. Core inflation (NFNE) for the same period is expected to moderate to 7.3% year-on-year, down from 9.0% in January 2025.
Meanwhile, the State Bank of Pakistan's foreign exchange reserves increased by $13 million during the week ended January 23, 2026, reaching $16.101 billion. Total liquid foreign reserves stood at $21.293 billion, providing some stability to the external sector.
However, external risks persist. Oil futures surged to near six-month highs amid concerns over a potential US military strike on Iran, which remains a key near-term risk for equities. This factor underscores the ongoing volatility and caution in the market, despite the day's positive performance.
