By Ayesha Saba

The market capitalization of the Pakistan Stock Exchange (PSX) increased to Rs16.53 trillion by the end of March 2026, reflecting improved investor confidence, stronger corporate earnings and positive capital market performance during FY2025-26, according to the Pakistan Economic Survey 2025-26 released by the Ministry of Finance.

The survey shows that PSX market capitalization rose from Rs15.24 trillion, or US$53.00 billion, on June 30, 2025 to Rs16.53 trillion, or US$59.23 billion, on March 31, 2026. This reflected an increase of 8.5%, or around Rs1.30 trillion, during the period under review.

According to the Ministry of Finance, the improvement was supported by stronger corporate earnings, a decline in both the policy rate and inflation from crisis-period levels, successful reviews under the IMF’s Extended Fund Facility programme and subsequent tranche disbursements, all of which contributed to a stable macroeconomic environment and strengthened investor confidence.

The survey notes that the benchmark KSE-100 Index also recorded strong performance during July-March FY2026, rising by 18.4% from 125,627 points to 148,743 points. The index reached its highest level of 189,167 points on January 23, 2026, while the lowest level was recorded at 128,199 points on July 1, 2025.

The average daily trading volume also increased to 1,206 million shares during July-March FY2026, compared with 834 million shares in FY2025. As of March 31, 2026, the number of listed companies stood at 536, while total listed capital was recorded at Rs1.626 trillion.

The growth in market capitalization reflected rising valuations in several major sectors as investors responded positively to improved macroeconomic fundamentals, better external account conditions and expectations of stronger corporate profitability.

According to the report, commercial banks remained the largest contributor to market capitalization, with a market value of Rs4.15 trillion and a share of 25.1% in total market capitalization by end-March 2026.

Oil and gas exploration companies were the second-largest segment, with market capitalization of Rs2.63 trillion and a share of 15.9%. Cement accounted for 8.0%, fertilizer 7.8%, and food and personal care products 7.7% of total market capitalization.

Together, the top five sectors accounted for 64.6% of total PSX market capitalization. The survey notes that commercial banks, oil and gas exploration companies, cement, fertilizer and food and personal care products dominated the market capitalization profile.

Several sectors showed strong gains during the period under review. Market capitalization of commercial banks increased by 26.4%, technology and communication by 26.5%, investment banks, investment companies and securities companies by 22.8%, fertilizer by 18.4%, and power generation and distribution by 17.8%.

The Ministry of Finance noted that capital markets play an important role in mobilizing savings, facilitating investment and providing financing to the corporate sector and the government. A stronger and more active stock market can support business expansion, deepen financial markets and provide investment opportunities to individuals and institutions.

The survey highlights the growing importance of Islamic finance within Pakistan’s capital markets. In the secondary capital market, 308 out of 536 listed securities, or 57.5%, were Shariah-compliant as of March 31, 2026.

Shariah-compliant securities had a market capitalization of Rs10.6 trillion, accounting for 64% of total market capitalization of Rs16.5 trillion. This reflected strong investor interest in Islamic investment products and the expanding role of Shariah-compliant securities in Pakistan’s capital market.

Activity in the Sukuk market also continued to expand during July-March FY2026. The Securities and Exchange Commission of Pakistan issued 53 certificates of Shariah-compliant securities to corporate Sukuk issuers amounting to Rs229.6 billion under the Shariah Governance Regulations, 2023.

In the sovereign Sukuk segment, total issuances worth Rs1.86 trillion were carried out, while secondary market trading surpassed Rs1.38 trillion during the period, reflecting robust market activity and investor participation.

The survey further notes that capital market performance was supported by reforms introduced by the Securities and Exchange Commission of Pakistan, including improvements in settlement periods, initial public offerings, investor facilitation, private placement mechanisms, digital platforms for investors and corporate disclosures.

According to the Ministry of Finance, Pakistan’s economy grew by 3.70% during FY2025-26, while private investment increased by 12.8%, creating a more supportive environment for capital market development and corporate expansion.

The external sector also supported investor confidence. During July-March FY2026, workers’ remittances rose by 8.2% to US$30.3 billion, while the current account recorded a marginal surplus of US$72 million.

The report notes that Pakistan’s capital markets, particularly the equity market, performed well compared with major global stock markets during FY2026. The improvement reflected stronger investor sentiment, better corporate earnings prospects and continued confidence in the government’s reform agenda.

As Pakistan seeks to increase investment and accelerate economic growth, the stock market is expected to play an increasingly important role in providing financing opportunities for businesses and investment avenues for savers.

With PSX market capitalization rising to Rs16.53 trillion by end-March 2026 and the KSE-100 Index gaining 18.4% during July-March FY2026, Pakistan’s capital markets showed significant improvement, supported by macroeconomic stability, stronger investor confidence and expanding Islamic finance activity.

Credit: INP-WealthPk