The Pakistan Stock Exchange (PSX) opened Friday’s trading session on a high note, with the benchmark KSE-100 Index surging by 1,581.77 points, or 1.3%, to hit an intraday peak of 123,628.23. This strong recovery comes a day after the market had dipped over 700 points, reflecting renewed investor optimism following the federal budget’s approval and signs of strengthening economic ties with the United States.
The index’s low point for the day was 122,222.69—still a modest gain from Thursday’s close of 122,046.46. By midday, the market remained buoyant, reversing the previous day’s losses and signaling a restored sense of direction among investors.
Independent investment analyst AAH Soomro attributed the rally to improved macroeconomic outlooks and geopolitical developments. “Optimism is back owing to renewed US-Pakistan ties and macroeconomic rerating,” Soomro said. “Valuations are attractive compared to fixed income alternatives.”
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Trade Momentum Builds with US
One of the biggest drivers of market sentiment was the progress in US-Pakistan trade talks. Finance Minister Muhammad Aurangzeb recently held a virtual meeting with US Commerce Secretary Howard Lutnick, during which both sides expressed hope for concluding discussions on a Preferential Trade Agreement (PTA) soon. Negotiators are also considering a broader Bilateral Trade Agreement (BTA).
This follows Field Marshal Asim Munir’s high-level diplomatic visit to Washington, which analysts say helped revive long-dormant economic channels between the two countries. If finalized, the PTA or BTA could mark a major turning point in Pakistan’s export strategy and foreign investment landscape.
The potential for tariff concessions, reciprocal market access, and long-term trade cooperation has energized the business community and pushed investor interest back into equities. Such a shift could inject much-needed foreign capital and confidence into Pakistan’s economy amid ongoing IMF oversight and fiscal reforms.
Roshan Digital Surge and Budget Clarity Aid Sentiment
Adding to investor enthusiasm, fresh data from the Roshan Digital Account (RDA) initiative showed total inflows reached $10.38 billion from September 2020 to May 2025. In May alone, RDA inflows climbed 13% month-on-month to $201 million. The total number of digital accounts stood at 823,224 by the end of May, highlighting continued trust from overseas Pakistanis.
According to Saad Hanif of Ismail Iqbal Securities, $6.65 billion of RDA inflows have been deployed into local instruments like Naya Pakistan Certificates and Roshan Equity. Another $1.95 billion remains repatriable.
Meanwhile, the National Assembly’s approval of the Rs17.57 trillion federal budget for FY2025–26 provided much-needed policy clarity. New amendments to the Finance Bill 2026 include tax reforms and anti-fraud measures. Notably, a revised income tax structure was introduced for salaried individuals, with incomes up to Rs600,000 remaining exempt and progressive slabs applied to higher incomes.
Markets typically react positively to fiscal clarity — and this time was no exception. Together with trade diplomacy and RDA inflows, it created a perfect storm of optimism that sent the KSE-100 Index soaring. Investors now wait to see if this momentum can be sustained into the coming weeks.
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