The Pakistan Stock Exchange (PSX) witnessed a historic rally on Wednesday as investors welcomed the federal budget for FY2025–26, which avoided imposing major new taxation measures. The benchmark KSE-100 Index soared by 2,328.24 points or 1.91%, closing at an all-time high of 124,352.68.
Bullish momentum dominated the session from open to close, with the index touching an intraday high of 124,588.17 and a low of 123,237.99. Trading volume for the KSE-100 Index stood at 332.58 million shares, reflecting strong investor participation across the board.
Of the 100 constituent companies, 75 closed in the green, 24 in the red, and one remained unchanged.
The rally was broad-based, with significant buying activity in key sectors such as cement, commercial banks, oil and gas exploration, power generation, and automobile assemblers. Top contributors to the day’s gains included Lucky Cement (+244.71 points), Fauji Fertilizer Company (+203.88 points), Pakistan Petroleum Limited (+199.10 points), Engro Fertilizers (+156.57 points), and Mari Petroleum (+148.56 points).
Top gainers by percentage included Pakistan GasPort Consortium (+10.00%), Bannu Woollen Mills (+9.76%), Pioneer Cement (+8.05%), Maple Leaf Cement (+7.40%), and the Pakistan Stock Exchange itself (+6.92%).
Conversely, some stocks faced pressure, with FrieslandCampina Engro Pakistan (-7.05%), Atlas Honda (-4.81%), Punjab Oil Mills (-4.14%), Cnergyico (-3.61%), and Unity Foods (-3.00%) among the top losers.
From a sectoral perspective, the rally was led by cement stocks, which added 576.42 points to the index, followed by oil and gas exploration companies (+468.23 points), commercial banks (+305.08 points), fertilizers (+284.96 points), and investment banks/securities (+187.29 points). Declines were seen in refinery stocks (-32.79 points), food and personal care products (-31.23 points), and automobile parts (-5.72 points), though these losses had limited impact on the overall momentum.
The sharp rally followed the federal government’s unveiling of the Rs17.573 trillion budget for FY2025–26 a day earlier. The budget proposed no significant increases in capital gains tax or dividend tax, maintaining the capital gains rate at 15%, a move welcomed by capital market participants.
“Investors are responding positively to the lack of major tax changes,” said Samiullah Tariq, Head of Research at Pak Kuwait Investment Company. “This signals policy continuity and reduces uncertainty — two things the market always rewards.”
Prime Minister Shehbaz Sharif praised the rally in a statement, calling it “a vote of confidence from investors and businessmen in a people-friendly budget.” He said the market reaction reflected optimism about economic stability and the government’s reform agenda.
Finance Minister Muhammad Aurangzeb presented the budget in the National Assembly on Tuesday, positioning it as a step toward restructuring Pakistan’s economic base. The budget targets 4.2% GDP growth for the next fiscal year, up from 2.7% in FY2024.
The government also announced a 7.5% inflation target, a significant reduction from the previous year, and projected a fiscal deficit of 3.9% of GDP — or Rs5.037 trillion — compared to 5.9% in the outgoing year. A primary surplus of 2.4% is also targeted, higher than both the current year’s budgeted 2% and the revised estimate of 2.2%.
Market analysts noted that continued IMF engagement, clarity on fiscal direction, and the absence of harsh tax surprises boosted investor confidence. Sentiment was further buoyed by expectations of monetary easing in the coming quarters, supported by improving inflation data and macroeconomic stability.
However, some analysts also cautioned that long-term sustainability will depend on the implementation of structural reforms, especially in tax administration, energy pricing, and privatisation.
“The current optimism is justified but fragile,” a brokerage house noted in a post-market report. “Any slippage in the reform path or deterioration in external accounts could quickly reverse gains.”
Nevertheless, Wednesday’s record close underscores investor approval of the government’s fiscal signalling — at least for now — as Pakistan’s capital markets continue to recover from a prolonged period of volatility and economic uncertainty.
