Interest rate cut hopes drive PSX higher

In a strong rally, the Pakistan Stock Exchange (PSX) on Monday soared to a new high above 182,400, up 3,373 points, on expectations of further monetary easing and macroeconomic stability.

During the session, the benchmark KSE-100 touched an intraday high of 183,964, while the intraday low was recorded at 179,535, reflecting healthy activity. Buying interest was mainly seen in key sectors such as fertilizers, cement, commercial banks and oil and gas companies.

Investor sentiment was supported by new purchases at the start of the new year and the expectation of a possible rate cut at the upcoming monetary policy announcement later this month.

At the close, the KSE-100 rose 3,373.31 points or 1.88% to 182,408.24.

“Investors are bullish on expectations of further monetary easing, driven by an improving external account position and continued focus on reforms amid political stability,” AKD Capital Markets Research Director Mohammed Awais Ashraf told The Express Tribune.

Subdued returns in alternative asset classes, coupled with a stronger currency, were expected to make equities a preferred investment choice in CY26, he said.

Ashraf expected the KSE-100 to reach 263,800 by Dec. 26, implying a return of 53%, or 48.4% in US dollar terms. This performance paves the way for the index to reach a historical market capitalization of $100 billion for the first time. He believes that improving relations with the US and GCC countries will help revive investment in Pakistan.

Sharing his views, JS Global Equity Research head Waqas Ghani commented that the break above 180,000 reinforced “our view that improving macroeconomic stability and supportive valuations can sustain the rally.” He added that 2026 returns are likely to be driven more by stock selection, while broad-based gains may be limited.

Topline Securities observed that the local stock market started the new year on a strong note as aggressive buying by local mutual funds set the tone for a decisive bullish session. Optimism around a possible rate cut at the upcoming monetary policy meeting fueled risk appetite, leading to broad participation across the market, it said.

The benchmark index jumped to an intraday high of 4,929 points before settling at 182,408, a strong gain of 3,373 points (+1.88%). The strong close near the day’s high underscored investor confidence and signaled a strong start to the year for stocks.

Top positive contributors to the index were United Bank, Habib Bank, Engro Holdings, MCB Bank, Engro Fertilizers and Fauji Fertiliser, which contributed a cumulative 1,853 points, Topline added.

KTrade Securities, in its market wrap, wrote that the PSX continued to rewrite history, extending its relentless rally with yet another record close. The KSE-100 index gained 3,373 points to 182,408.

The bull-run was belief-based and broad-based, supported by industry heavyweights rather than speculative sectors where commercial banks once again led the way, supported by fertilisers, oil and gas, investment banks and cement stocks, it said.

The overall sentiment remained consistently bullish, with momentum clearly favoring large-cap, fundamentally strong names. With banks continuing to outperform and macro headwinds remaining supportive, KTrade expected leadership to remain intact in 2026, keeping the broader trend positive and the bullish bias firmly in place.

Total trading volume rose to 1.4 billion shares compared to the previous tally of 1.1 billion. The value of traded shares stood at Rs 78 billion.

Shares of 483 companies were traded. Of these, 256 stocks closed higher, 197 declined and 30 remained unchanged.

Bank of Punjab was the volume leader with 95.5 million shares traded, gaining Rs 0.76 to close at Rs 43.09. It was followed by Pakistan International Bulk Terminal with 79.7 million shares, up Rs 1.63 to close at Rs 21.78 and K-Electric with 75.2 million shares, down Rs 0.01 to close at Rs 6.34.

During the day, foreign investors sold shares worth Rs 3.2 billion, the National Clearing Company said.