The stock market rose on Friday as investors bought the dip that pointed to easing tensions between the United States and Iran and a dovish tilt in rate expectations, lifting risk appetite early in the session.
The Pakistan Stock Exchange’s benchmark KSE-100 index rose to an intraday high of 184,645.65, gaining 3,189.32 points, or 1.76%, 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 witnessed a strong recovery after the latest news suggested detente between the US and Iran,” said Huzaifa Riaz, Director, Mayari Securities (Pvt) Limited.
“Furthermore, sentiment around the upcoming monetary policy remains subdued 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 and said, “Bullish activity was seen in the early sessions of the PSX amid reports of US-Iran de-escalation,” adding, “Speculations on further easing of SBP policy amid falling government bond yields played a catalytic role in the bullish activity on the PSX.”
A survey by Topline Research ahead of the State Bank of Pakistan (SBP) Monetary Policy Committee meeting on January 26, 2026 showed that 80% of participants expect a rate cut.
Of them, 56.4% expect 50 bp, 15.4% expect 100 bp, 5% expect 25 bp and 3% expect 75 bp, while 20% do not expect any change. In the previous decision on December 15, 2025, the SBP cut 50 bps.
SBP reserves increased by $16 million to $16.072 billion in the week ending January 9, taking total liquid reserves to $21.248 billion (commercial banks $5.177 billion, an increase of $40 million).
The SBP noted ongoing foreign exchange purchases amid a more stable current account supported by remittances; From June 2024 to September 2025, net purchases in the market amounted to $9.7 billion.
The central bank projects the FY26 current account deficit at between 0% and 1% of GDP and forecasts reserves at $17.8 billion by June 2026 with official inflows planned.
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.
