The Pakistan Stock Exchange (PSX) surged to a new all-time high during the shortened trading week, with the KSE-100 index touching 147,005 points before closing slightly lower at 146,492. The index gained 1,109 points or 0.8% week-on-week, as positive investor sentiment drove buying momentum. A key factor behind the rally was Moody’s upgrade of Pakistan’s sovereign rating from Caa2 to Caa1, which improved market confidence.
Monday saw a strong rally with the index jumping 1,547 points amid optimism surrounding a possible Pakistan-US trade deal. However, the momentum slowed by midweek as profit-taking emerged. On Tuesday, the market hovered near its peak before closing flat, while Wednesday saw a dip of 476 points as investors booked gains near 148,000. The final session of the week ended mostly unchanged, as investors adjusted positions ahead of the weekend.
The rally was supported by solid corporate earnings and news of a declining circular debt in the power sector. Reports indicated a significant reduction in circular debt to Rs1.6 trillion by June 2025, down from Rs2.4 trillion a year ago. This was mainly due to a disbursement of Rs801 billion to power producers. Moreover, expectations of a debt restructuring deal with Chinese IPPs added to investor optimism.
Sector-wise, banks, cement, and auto-related stocks led the gains, while fertiliser, exploration, and power companies dragged the index. Major positive contributors included Meezan Bank, Lucky Cement, HBL, Bank Alfalah, and Mari Petroleum. On the flip side, Fauji Fertiliser, Pakistan Petroleum, and Hub Power posted notable declines. Despite a dip in daily trading volumes, market breadth remained largely positive.
Macroeconomic indicators also played a role in lifting market sentiment. The Pakistani rupee appreciated slightly to close at 282.06 against the US dollar. Meanwhile, July auto sales fell 49% month-on-month but showed a 28% increase year-on-year, indicating a mixed trend. Oil production rose 0.8% week-on-week, with higher output at Makori East and Nashpa fields.
Overall, the PSX continued its bullish streak on the back of improved investor confidence, stronger economic signals, and hopes for further fiscal reforms. Analysts believe the market could maintain momentum if macro stability continues and political developments remain favourable.