Karachi, September 18 —
Pakistan’s benchmark KSE-100 index surged to a fresh record on Thursday, closing near the 158,000 mark as investor appetite strengthened following the signing of a Strategic Mutual Defence Agreement with Saudi Arabia and encouraging results from a government T-bill auction.
The KSE-100 settled at 157,953.46 points, gaining 1,775.65 points (1.14%) from the previous close, and touched an intraday high of 158,082.55, according to market data.
What propelled the rally
Market participants and analysts said the headline security pact signed in Riyadh during Prime Minister Shehbaz Sharif’s state visit lifted risk sentiment and encouraged broad-based buying across sectors. The agreement commits Pakistan and Saudi Arabia to enhanced defence cooperation and a joint response to any aggression, a development investors interpreted as reducing geopolitical risk and potentially unlocking new bilateral support.
At the same time, the government’s short-term funding operation drew robust participation, with authorities raising roughly Rs195 billion in the latest market treasury bill auction, comfortably above the target and helping to stabilise near-term liquidity conditions. Bids for a 10-year floating-rate Pakistan Investment Bond were, however, rejected as investors sought higher yields.
Analysts weigh in
Independent analyst A. A. H. Soomro described the defence pact as a major positive for market sentiment, saying the deal “has brought excitement across the board” and could lower the risk premium and attract liquidity into equities. He added that the index could continue to move higher in the near term absent a sharp correction.
Policy backdrop and yields
The stock market’s advance comes against a macro backdrop in which the State Bank of Pakistan has maintained a cautious stance. The central bank left its policy rate unchanged at 11 percent at its most recent meeting, citing inflation risks from recent floods even as some easing earlier in the year reduced the policy rate significantly from its 2024 highs. The pause in monetary easing means real rates remain a factor investors are monitoring alongside fiscal financing operations.
T-bill yields were little changed at the close of the auction, reflecting steady demand for short-term paper even as longer-dated bond bids were turned away. Market commentators said the combination of improved sentiment from the defence tie-up and orderly debt market activity underpinned the equity upswing.
Outlook
Traders said momentum may persist while geopolitical headlines remain favourable and liquidity conditions stay supportive. Still, analysts cautioned that any deterioration in macro indicators, unexpected shifts in monetary policy, or fresh regional tensions could quickly check gains. Investors will be watching upcoming corporate flows, foreign investor activity, and any further details on the Riyadh agreements for direction.
