Stocks Rise: Budget Boosts Investor Confidence
Pakistan’s stock market soars to a record high, the KSE 100 index, fueled by investor confidence following the federal budget declaration. The budget’s stance on taxes sparked buying interest,propelling indices upward. Though, geopolitical events, including US tariffs and escalating Middle East tensions, created market volatility. Despite this,analysts project a continued upward trend for the Pakistan stock market,driven by sustained earnings and economic stability. Banks, exploration, and production companies are set to benefit. Find this and other market updates at News Directory 3. Learn about the sectors contributing positively and those facing challenges in this dynamic financial climate. Discover what’s next …
Pakistan Stock Market Reaches Record High Amid Global Uncertainty
Updated June 15, 2025
KARACHI, Pakistan — Pakistan’s stock market, the KSE 100 index, surged to a record high this week, driven by investor optimism following the federal budget declaration. The budget maintained existing capital gains tax (CGT) and dividend rates, reinforcing confidence in fiscal consolidation. This spurred renewed buying interest across various sectors.
However, gains were tempered later in the week. News of a 50% U.S. tariff on steel imports from trading partners, coupled with escalating Middle East tensions following reported Israeli strikes in Iran, introduced market volatility. The attack resulted in the deaths of senior military personnel.
The market initially reacted positively to the FY26 federal budget. Arif Habib Ltd (AHL) noted the absence of increased CGT or dividend taxes. Equities became more attractive as an asset class due to a proposed increase in tax on interest income.
Geopolitical anxieties in the Middle East created a cautious sentiment, increasing uncertainty in global markets and placing pressure on the local stock exchange.
The government successfully raised 853.5 billion rupees in a T-bill auction against a 900 billion rupee target. The auction saw strong participation of 2.992 trillion rupees, with yields declining by 1-25 basis points across all tenors. Auto sales saw a recovery in demand, surging 40% month-on-month and 35% year-on-year to 14,800 units in may. The State Bank of Pakistan’s (SBP) foreign exchange reserves increased by $167 million to $11.7 billion, while the rupee depreciated by 79 paisas, closing at 282.96 against the dollar.
The KSE 100 index reached a new all-time high on Wednesday, closing at 124,353 points. The bullish trend continued into Thursday, peaking above 126,500 in early trading. However, profit-taking led to a close in the red.
the KSE 100 index gained 503 points, or 0.4%, settling at 122,143.57 points week-on-week. Cement, power generation and distribution, commercial banks, fertilizer, and oil and gas exploration sectors contributed positively. Tech and interaction, chemicals, automobile assemblers, refineries, and food and personal care products saw negative contributions.
Packages Ltd, Fauji Fertilizer, Maple Leaf Cement, Mari Energies, and United Bank showed scrip-wise gains. Engro Fertiliser, Systems Ltd, Hub Power, K-Electric, and Colgate-Palmolive were negative contributors.
Foreign investors sold $7.43 million worth of shares this week, compared to $14.70 million last week.Banks and exploration and production companies saw the most selling. Local banks/DFIs and individuals reported buying activity.
Average trading volume increased 37.3% to 906.8 million shares, with the value traded jumping 33.3% to $131.5 million week-on-week. Remittances surged to $3.68 billion in May, with FY25 inflows nearing $35 billion. The Finance Bill 2025-26 proposed over 415 billion rupees in new taxes. The Federal Board of Revenue (FBR) also introduced an ‘Energy Vehicle Adoption levy’ on locally made and imported vehicles.
What’s next
Looking ahead, AHL anticipates that equity market participants will closely monitor the monetary policy announcement scheduled for June 16. The policy is expected to remain unchanged following a resurgence of inflation in May. Market performance will also depend on geopolitical developments, notably the anticipated U.S.-Iran meeting. De-escalation signs from this meeting could lead to a market recovery.AKD Securities projects a positive outlook, anticipating a broadly neutral or positive impact from the federal budget across most sectors. They also foresee potential for a rate cut during fiscal year 2025, with inflation expected to remain around 7.0%.
The KSE100 is projected to continue its upward trend, targeting 165,215 points by the end of December. This growth is expected to be driven by strong earnings in the fertilizer sector, sustained returns on equity in banks, and improved cash flows for exploration and production companies and oil marketing companies. These sectors are poised to benefit from decreasing interest rates and overall economic stability, contributing to the overall Pakistan stock market performance.