Understanding the benchmark KSE100 index

Whenever there is a need to mention the stock market in Pakistan, news media outlets toss out the term ‘KSE100’ and expect everyone to automatically understand it. Truth be told, most don’t and no one bothers to explain it. 

To the uninitiated, the KSE100 is some sort of a creature which falls down, takes a beating, and every now and then straightens up only to come crashing down again. The term is elusive; important but complicated. 

This has gone on for far too long. And so we thought, perhaps, we could attempt to try to understand it together. 

Indexes and the KSE100

A stock market index is essentially a tracker, a way to measure how a certain group of stocks from an industry or industries are performing in the stock market at any given time. They can include 10, 100, 500 or even all of the stocks in the stock market. The most famous index in the world is the S&P 500 index, which tracks the share prices of the 500 largest public companies in the United States of America. 

At home in the Pakistan Stock Exchange (PSX), the equivalent of the S&P 500 is the KSE100 index.