The Pakistan Stock Exchange (PSX) is expected to maintain positive momentum with the KSE-100 Index forecasted to reach 263,800 by December 2026, driven by further monetary easing, an improving external account position, and ongoing reforms amid political stability, according to a note by AKD Research.
The KSE-100 Index surged by 6,634 points, up 3.8% week-on-week, to a new all-time high of 179,035 points during the week ended on Friday. This momentum was supported by favorable New Year effects and a softer-than-expected inflation print of 5.6% for December 2025. Investor sentiment was further buoyed by a sharp rally in the exploration and production (E&P) sector, particularly following Oil and Gas Development Company’s (OGDC) oil and gas discovery in the Nashpa Block, which added 4.1kbpd of oil and 10.5mmcfd of gas to its reserves.
Additionally, Oil Marketing Company (OMC) volumes rose by 6% YoY in December 2025, and market participation improved by 9.7% week-on-week, with the average daily trading volume (ADTV) increasing to 1.3 billion shares, compared to 1.1 billion shares the prior week.
From a macroeconomic perspective, Pakistan’s trade deficit widened by 24% YoY to $3.7 billion in December 2025, while GDP grew by 3.7% YoY during 1QFY26. The State Bank of Pakistan (SBP) reported a $13 million increase in foreign exchange reserves, which reached $15.9 billion as of December 26, 2025. Additionally, the Pakistani rupee appreciated by 0.02% against the U.S. dollar, closing the week at 280.11 PKR/USD.
AKD Research forecasts that the positive momentum in the KSE-100 Index will continue throughout 2026, underpinned by further monetary easing and improvements in the external account. The index is expected to deliver a robust return of 53% in 2026, reaching a historic market capitalisation of $100 billion.
According to the brokerage firm, this growth is anticipated to be driven by stronger returns on equity (RoE) for banks, enhanced profitability in the E&P and OMC sectors, and robust performance in the fertiliser industry.
Investor sentiment is also expected to improve, supported by a likely increase in foreign portfolio and direct investment flows, driven by stronger relations with the U.S. and Gulf Cooperation Council (GCC) countries.
