KARACHI: KSE-100, the benchmark index of the Pakistan Stock Exchange, saw an increase of 44 percent during FY2025-26, ending the year on a record high level of 180,301 points, compared to 125,627 points at the end of FY25. The outstanding performance of KSE-100 in FY26 marks the end of a truly remarkable three-year period in Pakistan’s stock market, wherein KSE-100 rose by 335 percent in PKR and 347 percent in USD terms.
Despite some rough patches during the year, the full year return was achieved showing the inherent strength of the markets and investor belief in the macroeconomic recovery of Pakistan under the IMF package.
Two Completely Different Halves of the Year
KSE-100 returns for FY26 have been clearly differentiated into two entirely different halves. While the first half showed an impressive return of 39 percent on the back of positive economic signs despite the havoc caused by floods in July and August 2025, the second half turned out to be more volatile, fluctuating between its lowest level of 146,480 on March 9, 2026, to its highest point of 189,167 on January 23, 2026, a difference of 29 percent within the same half year period.
However, the main cause of the high volatility during the second half is the Iran–US and Israel conflict, which caused a sudden rise in oil prices. Given that Pakistan imports more than 80 percent of its energy needs, the worries about slip-ups in the external account accelerated very quickly.
Proactive Government Moves Save From Externally Generated Account Crisis
These worries became more serious after the announcement by Pakistan that it would be returning USD3.5 billion of UAE deposits in April 2026. The government acted in an anticipatory manner by introducing demand management policies on petroleum along with receiving financial assistance from Saudi Arabia. In addition, Pakistan has managed to generate USD750 million through Eurobonds and USD250 million through Panda bonds in April and May 2026, respectively.
These measures were responsible for the recovery of the market above the 168,000 mark before April was over. The positive agreement on the MoU on the Iran-US conflict and the USD4.3 billion record remittances in May 2026 brought the index above 180,000 mark.
Top-performing and Bottom Performing Sectors in FY26
The Sugar, Jute, and Transportation Sectors performed well above their respective benchmarks in FY26, while the Vanaspati, Synthetic Rayon, and Woolen Sectors were bottom performing, according to Topline Securities. In terms of individual companies, Bank of Punjab, PTCL, and Askari Bank Ltd were some of the best-performing stocks on the KSE-100 index in FY26.
The foreign corporates were net sellers in FY26, with net selling worth USD895 million. Without considering the disposals of Pioneer Cement and Rafhan Maize, foreign corporates sold securities worth USD542 million. The key buyers among the locals included the mutual funds and companies, whereas the banks, insurers, and brokers were major sellers.
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Performance of IPO Market in FY26
There was an impressive performance by the KSE-100 in the fiscal year 2026 that was coupled with a positive cycle for IPOs. According to the PSX statistics, there were 13 approved IPOs, out of which 11 were listed and 2 were in the pipeline. The total proceeds from all IPOs listed amounted to Rs18.4 billion with the highest being by SLM Tires Limited with Rs7.77 billion worth.
Macroeconomic Fundamentals Underpinning the KSE-100 Rally
KSE-100 FY26 stock market performance was underpinned by robust macroeconomic fundamentals. At May 2026, inflation was recorded at 11.7 percent, while the average for eleven months was at 6.69 percent. Remittance inflows totalled USD 38.1 billion from July to May FY26 period, representing a 9.2 percent year-on-year increase. Pakistani Rupee has risen around 2 percent against US Dollar, and there have been foreign exchange reserves of the State Bank of Pakistan.
Policy rates have been cut down by 50 basis points in December 2025 but raised by 100 basis points in April 2026 because of inflation. The rate is 11.5% at the end of fiscal year 2026. A staff level agreement was signed between Pakistan and IMF for the third review of EFF in March 2026 worth USD1.21 billion.
In the coming years, the performance of KSE-100 in the FY26 period leading into FY27 will largely rely upon geopolitical events in the region, world oil prices, availability of foreign exchange reserves, consistency of IMF program and changes in sovereign ratings of Pakistan. Topline Securities lists these factors as being of vital importance for the coming fiscal year.
Nayab Fatima is a media professional specializing in fact-based journalism, research, and analytical reporting on technology, telecom, aviation, and automobiles.
