The stock market rose on Friday as investors bought the dip indicating a de-escalation between the United States and Iran and a dovish stance in rate expectations, increasing risk appetite in early trading.
The Pakistan Stock Exchange’s benchmark KSE-100 index climbed to an intraday high of 184,645.65, gaining 3,189.32 points, or 1.76 percent, from the previous close of 181,456.33, and hit a low of 182,559.69, up 1,103.36 points, or 0.61%.
“The market saw a strong recovery after the latest news suggested de-escalation between the US and Iran,” said Huzaifa Riaz, director, Mayari Securities (Pvt) Limited.
“Moreover, sentiment around the next monetary policy remains accommodative as the latest auction suggests a 50 basis point cut, which could further improve risk sentiment,” he added.
Ahsan Mehanti, Managing Director and CEO of Arif Habib Commodities, echoed these sentiments, saying, “Bullish activity seen in early session on PSX amid reports of de-escalation between US and Iran,” adding, “Speculations of further easing of SBP policy amid falling government bond yields played a catalytic role in the bullish activity on PSX.”
A Topline Research survey conducted ahead of the State Bank of Pakistan’s (SBP) monetary policy committee meeting on January 26, 2026 showed that 80% of participants expected a rate cut.
Among them, 56.4% expect a rate of 50 basis points, 15.4% expect a rate of 100 basis points, 5% expect a rate of 25 basis points and 3% expect a rate of 75 basis points, while 20% expect no change. In the previous decision on December 15, 2025, the SBP had reduced by 50 basis points.
SBP reserves increased by $16 million to $16.072 billion in the week ended January 9, bringing total liquid reserves to $21.248 billion ($5.177 billion for commercial banks, up $40 million).
The SBP noted ongoing foreign exchange purchases amid a more stable current account backdrop supported by remittances; From June 2024 to September 2025, net market purchases totaled $9.7 billion.
The central bank forecasts a current account deficit for FY26 of between 0 and 1 percent of GDP and projects reserves at $17.8 billion by June 2026 with expected official inflows.
On Thursday, the KSE-100 index fell 1,113.48 points (0.61%) to 181,456.34 from 182,569.82, after trading between 183,717.54 and 180,783.63.
