Stocks rallied on Friday as investors bought the decline, pointing to a de-escalation between the US and Iran and a dovish tilt in interest rate expectations, lifting risk appetite early in the session.
The Pakistan Stock Exchange’s benchmark KSE-100 index climbed to an intraday high of 184,787.27, up 3,330.94 points, or 1.84%, from the previous close of 181,456.33 and touched a low of 182,559.69, up 3.61 points, or 3.61 percent.
“The market witnessed a strong recovery after the latest news streams suggest the US-Iran de-escalation,” said Huzaifa Riaz, Director, Mayari Securities (Pvt) Limited.
“Furthermore, sentiment around the next monetary policy remains dovish as the latest auction suggests a 50 bps cut, which could further improve risk-on sentiment,” he added.
Echoing the sentiment, Ahsan Mehanti, Managing Director and CEO of Arif Habib Commodities said, “Bullish activity seen in early session on PSX amid reports of US-Iran de-escalation,” adding, “Speculation on further SBP policy easing amid falling Treasury yields played a catalytic role in PSX activity.”
A Topline Research survey ahead of the State Bank of Pakistan (SBP) Monetary Policy Committee meeting on January 26, 2026 found that 80% of participants expect a rate cut.
Of those, 56.4% see 50 bps, 15.4% expect 100 bps, 5% look for 25 bps, and 3% expect 75 bps, while 20% expect no change. In the previous decision on December 15, 2025, the SBP cut 50 bps.
SBP reserves rose $16 million to $16.072 billion in the week ended January 9, bringing total liquid reserves to $21.248 billion (commercial banks $5.177 billion, up $40 million).
SBP noted ongoing purchases of foreign currency amid a more stable current account supported by remittances; from June 2024 to September 2025, net market purchases totaled $9.7 billion.
The central bank projects the FY26 current account deficit at 0-1% of GDP and sees reserves at $17.8 billion in June 2026 with planned official inflows.
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.
