What happened
The Pakistan Stock Exchange opened the calendar year on a buoyant note, with the KSE-100 benchmark surging past 187,000 points in the first full trading week before profit-taking pared the weekly gain, Dawn Business reported on 11 January 2026. The index touched uncharted territory during the early sessions of the week, then eased as investors locked in gains in the last two sessions, ending Friday at 184,410 points — up 5,375 points, or 3 per cent week-on-week, according to Arif Habib Ltd (AHL).
The rally was driven by abundant liquidity and expectations of a further monetary easing. Topline Securities Ltd said the KSE-100 added 3 per cent week-on-week on aggressive buying from mutual funds after fresh allocations to equity schemes, together with optimism over a policy-rate cut at the upcoming monetary-policy meeting.
Why it mattered
The week crystallised a tension at the heart of Pakistan’s equity market: domestic investors continued to pour funds into equities even as foreign investors remained net sellers. State Bank of Pakistan (SBP) data, as cited in Dawn, showed net foreign outflows of $393 million from the equity market in the first half of FY26, against inflows of $142 million in the same period a year earlier, underscoring persistent caution among overseas investors.
The trading tape itself pointed the other way. Dawn reported that average daily traded volume climbed 77 per cent week-on-week to 1.3 billion shares, while average daily traded value jumped 151 per cent to Rs79 billion — a sign of heightened participation across the board. Sector-wise, transport, pharmaceuticals, insurance, refineries, and leather and tanneries led the gains; textile spinning and select consumer segments lagged.
SBP data published inside the same report showed SBP-held foreign exchange reserves rose by $140.6 million week-on-week to $16.1 billion, while commercial-bank reserves climbed by $39.6 million to $5.1 billion. The rupee appreciated marginally, strengthening 0.03 per cent to close at Rs280.02 against the dollar. Worker remittances in December 2025 reached $3.6 billion, up 17 per cent year-on-year and 13 per cent month-on-month, providing support to the external account.
What is still uncertain
Analyst targets diverge sharply. AKD Securities projected the KSE-100 reaching 263,800 points by December 2026, citing the likelihood of further monetary easing, an improving external account and continued reform efforts. The broker’s case rests on sentiment and rate-cut execution, not on foreign-portfolio inflows, which remained absent.
The inflation trajectory that the rally was partly priced for was also an open variable. Headline inflation has been decelerating, supporting the rate-cut narrative that anchored the week’s buying, but the underlying mix and the timing of any cut at the next monetary-policy meeting had not been confirmed by the time of Dawn’s 11 January recap. The KSE-100 was, at 9.2 times price-to-earnings with a dividend yield of about 5.4 per cent, trading at multiples that already assume a significant earnings recovery.
Section: Sources & reporting notes
This is a synthesis of published material, not eyewitness reporting. Sources were reviewed on 11 January 2026.
- Primary source — Dawn Business: PSX hits uncharted highs in bullish week on liquidity surge11 January 2026 · Markets summary including SBP reserve build-up, KSE-100 weekly move, AHL/Topline/AKD broker commentary, rupee fix and remittance data.
- Independent source — State Bank of Pakistan data (cited via Dawn)11 January 2026 · SBP weekly reserves data ($16.1bn held; $5.1bn commercial banks) and FX-market weekly print referenced by Dawn's reporting; first-party reserves, rupee and net foreign-flow data.
