Pakistan stocks gain 44% in FY26 as market eyes new record by December

Pakistan’s benchmark stock index gained 44% during fiscal year 2025-26, supported by macroeconomic stability under the International Monetary Fund (IMF) program, with brokerage house Topline Research forecasting the market to reach 203,000 points by December 2026.

The benchmark KSE-100 Index closed FY26 at 180,302 points, delivering a 44% year-on-year return in Pakistani rupee terms and 46% in U.S. dollar terms, according to a market review released by Topline Research on Tuesday.

The brokerage said the Pakistan Stock Exchange (PSX) has generated cumulative returns of 335% in rupee terms and 347% in U.S. dollar terms over the past three fiscal years (FY24-FY26), reflecting a sharp recovery driven by improving macroeconomic fundamentals.

Strong first half drives annual performance

Topline said the market’s FY26 performance was largely driven by gains in the first half of the fiscal year.

The KSE-100 Index advanced 39% during the first half of FY26, supported by improving economic indicators despite floods in July and August 2025. In contrast, the market gained a modest 4% in the second half amid heightened geopolitical and economic uncertainty.

Geopolitical tensions trigger volatility

The brokerage said the second half of FY26 was marked by significant volatility, with the benchmark index falling to a low of 146,480 points on March 9, 2026, before recovering. The index had earlier reached a record high of 189,167 points on Jan. 23, 2026, representing a trading range of nearly 29%.

According to Topline, the primary source of volatility was the Iran-U.S./Israel conflict, which caused a sharp rise in global oil prices. Because Pakistan imports more than 80% of its energy needs, investors grew concerned about potential pressure on the country's external account.

Market sentiment weakened further after Pakistan announced plans in April 2026 to return USD 3.5 billion in deposits to the United Arab Emirates (UAE), raising concerns over external financing.

Government measures support recovery

Topline said investor confidence improved after the government introduced measures to manage domestic petroleum demand and secured additional financial support from Saudi Arabia, easing concerns over higher oil prices and external repayment obligations.

The brokerage also highlighted Pakistan’s successful return to international capital markets during the period, raising USD 750 million through a Eurobond in April 2026 and USD 250 million through a Panda bond in May 2026 despite elevated geopolitical risks.

These developments helped the KSE-100 recover above 168,000 points by mid-April before climbing further after the signing of a memorandum of understanding related to the Iran-U.S. conflict and record monthly workers’ remittances of USD 4.3 billion in May 2026. The index ended the fiscal year at around 180,000 points.

Market remains below record high

Despite the strong recovery, Topline said the benchmark index remains 5% below its record high reached on Jan. 23, 2026, while standing 23% above its March 9 low.

The brokerage maintained a positive outlook for Pakistani equities, projecting the KSE-100 Index to reach 203,000 points by December 2026, citing continued macroeconomic stability and improving investor confidence.