KARACHI: The Pakistan Stock Exchange (PSX) rebounded sharply on Friday, buoyed by fiscal clarity, renewed foreign inflows, and optimism following the approval of the federal budget for FY2025–26, as well as progress in Pakistan-US trade talks.
The benchmark KSE-100 Index surged to an intraday high of 123,628.23, marking a gain of 1,581.77 points or 1.3%. Even at its lowest, the index stood at 122,222.69, still reflecting an increase of 176.23 points from Thursday’s close of 122,046.46.
“Optimism is back owing to renewed US-Pakistan ties and macroeconomic rerating,” said AAH Soomro, an independent investment and economic analyst. “Valuations remain attractive compared to fixed income alternatives.”
The National Assembly passed the Rs17.57 trillion federal budget on Thursday, adopting amendments to the Finance Bill 2026, which introduced several key revisions. These included changes to the Sales Tax Act, notably a provision granting the finance committee authority to approve arrests in cases of tax fraud exceeding Rs50 million.
The bill also revised the income tax structure for salaried individuals, maintaining tax exemption for annual incomes up to Rs600,000. Incomes between Rs600,000–1.2 million are now taxed at 1%, while fixed slabs apply progressively, scaling to Rs346,000 for the Rs3.2 million–4.1 million income bracket.
Trade Talks and Diplomatic Boost
Investor sentiment was further uplifted by signs of deepening US-Pakistan trade engagement. Islamabad and Washington are reportedly close to concluding negotiations on a Preferential Trade Agreement (PTA), aimed at expanding market access and enhancing bilateral trade.
A virtual meeting earlier this week between Finance Minister Muhammad Aurangzeb and US Commerce Secretary Howard Lutnick yielded mutual optimism. Both sides expressed confidence in finalising tariff and trade arrangements in the near future.
The momentum follows Field Marshal Asim Munir’s recent diplomatic visit to the US, which has reportedly invigorated both economic and strategic dialogue. Officials suggest a PTA or Bilateral Trade Agreement (BTA) could be reached within months.
RDA Inflows and Investor Confidence
The Roshan Digital Account (RDA) also continued to play a pivotal role in market stability. Inflows through RDA have now reached $10.38 billion from September 2020 to May 2025, with May alone recording a 13% month-on-month rise to $201 million. The number of digital accounts has risen to 823,224.
According to Saad Hanif, Head of Research at Ismail Iqbal Securities, $6.65 billion from RDA has been deployed locally, largely into Naya Pakistan Certificates and Roshan Equity, while $1.95 billion remains repatriable.
Previous Session Recap
On Thursday, prior to the budget’s approval, the KSE-100 had dipped by 715.18 points, or 0.58%, closing at 122,046.46 amid pre-budget uncertainty. Friday’s rebound reflects restored investor confidence and renewed momentum heading into the next fiscal cycle.
