Moaaz Manzoor

Pakistan’s equity market recorded a year-on-year improvement, with the benchmark KSE-100 index rising by 70,968 points over the past year to reach 184,174 by the end of January 2026, reflecting strengthening investor confidence alongside improving macroeconomic stability.

According to the Monthly Development Update (February 2026) issued by the Economic Policy Wing of the Ministry of Planning, Development and Special Initiatives, the index climbed from 113,206 points in January last year to 184,174 points as of 31 January 2026, marking a 62.7 percent increase.

The sharp rise indicates renewed optimism among investors and greater participation in the capital market. Improved economic conditions have contributed to a more predictable business environment, encouraging both institutional and individual investors to expand their exposure to listed equities.

The report links the positive market trend to broader stabilization across the economy. Moderating inflation, sustained industrial recovery, steady fiscal performance and consistent external inflows have collectively strengthened the macroeconomic landscape. These improvements have reduced uncertainty and supported expectations of better corporate performance.

Financial markets tend to respond quickly to such developments. As stability improves, investors are generally more willing to take long-term positions, resulting in higher valuations and stronger trading activity. The increase in the KSE-100 index therefore reflects growing confidence that economic conditions are becoming more favorable.

The benchmark index tracks the performance of leading companies listed on the Pakistan Stock Exchange across multiple sectors. The broad-based increase suggests that gains were spread across industries rather than concentrated in a few shares, pointing to wider improvement in market sentiment.

A stronger stock market can also have positive spillover effects on the broader economy. Higher valuations enhance companies’ ability to raise capital for expansion, improve liquidity in the financial system and support investment activity. These factors contribute to overall economic dynamism and growth prospects.

The Planning Commission’s assessment indicates that maintaining macroeconomic stability will remain essential to sustaining this upward trajectory. Continued progress in economic management and policy coordination can help preserve investor trust and reinforce confidence in capital markets.

Compared with last year’s level, the addition of nearly 71,000 points highlights the scale of recovery in Pakistan’s equity market during FY2025-26. The improvement reflects a strengthening investment climate and signals that market participants view current conditions more positively than in the previous year.

With the KSE-100 index at 184,174 points by the end of January, the latest figures position the stock market as a key barometer of rising confidence in the country’s stabilization and recovery.

Credit: INP-WealthPk