The Pakistan Stock Exchange (PSX) kicked off the fiscal year on a high note, with the KSE-100 index surging by 6.1% to close at a record high of 131,949.06 points.

Over the past week, the KSE-100 index gained an impressive 7,570 points, with average daily trading volumes increasing by 31.4% to 967 million shares and the average traded value rising by 33% to Rs41.5 billion.

In FY25, the KSE-100 emerged as the best-performing asset class, delivering a remarkable return of 60.15%, significantly outperforming T-Bills and other investment options.

The commercial banks sector played a pivotal role in the index's growth, contributing 4,561 points, while sectors such as cement and glass negatively impacted the overall performance.

This recent surge was fueled by strong institutional buying, as investors shifted funds from fixed-income instruments to equities following the implementation of the Finance Act 2025-26, which raised the withholding tax on savings returns.

Despite the local market's strength, foreign investors were net sellers for the second consecutive week, offloading $15.3 million in equities, while local mutual funds and companies collectively invested $34.3 million.

Macroeconomic indicators have shown positive trends, with inflation dropping to 3.2% in June and the trade deficit narrowing to $2.3 billion, contributing to improved investor sentiment.

Additionally, foreign exchange reserves saw a significant increase of $3.66 billion, reaching $12.73 billion for the week ending June 27, marking the second-largest weekly increase on record.

Recent regulatory changes have also influenced the market, including a reduction in electricity tariffs by Nepra, a hike in gas prices by Ogra, and the introduction of an NEV levy affecting car prices.

Looking ahead, forecasts indicate a continued bullish momentum in the equity market, with expectations for the KSE-100 to reach 165,215 points by December 2025, driven by positive investor sentiment and macroeconomic stability.