ISLAMABAD: Pakistan’s equity market surged today as investor confidence soared following the announcement of the federal budget for FY2025–26. Analysts credited the market rally to investor-friendly tax policies and the government’s alignment with International Monetary Fund (IMF) fiscal targets.
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index surged to an intraday high of 124,135.96, marking a gain of 2,111.52 points or 1.73%. The day’s low was 123,237.99, still up by 1,213.55 points or 0.9%.
Market sentiment received a major boost from the decision to keep the capital gains tax (CGT) on equities unchanged at 15%, while simultaneously raising taxes on interest income — a shift seen as favouring equity investments over fixed-income instruments.
“This differential tax treatment is a key catalyst for equities. We could be seeing the early stages of a run toward 150,000 on the KSE-100 within a year,” said AAH Soomro, an independent investment and economic analyst.
The newly presented budget outlines projected revenues of Rs19.3 trillion and expenditures of Rs25.8 trillion, resulting in a federal fiscal deficit of Rs6.5 trillion (5.0% of GDP). The national fiscal deficit is projected at Rs5 trillion (3.9% of GDP), with provinces expected to deliver a Rs1.5 trillion surplus — an increase from Rs1 trillion in the previous fiscal year.
Topline Securities said the budget could trigger a re-rating of the PSX’s price-to-earnings (PE) multiple from 5.2x to 7x, assuming it passes without major revisions — a move that would make equities significantly more attractive heading into FY26.
Wednesday’s rally builds on Tuesday’s momentum, when the KSE-100 rose by 383.44 points (0.32%) to close at 122,024.44. That session saw a high of 122,611.53 and a low of 121,589.90.
