The KSE-100 gained 7,477 points last week, a rise of 4.5 percent to close at 173,887 and the strongest weekly rally in nearly six months. The index added almost 4,000 points on Wednesday alone.
It happened in the week after the State Bank raised its policy rate to 12 percent, which ordinarily pulls money out of equities and into fixed income. What drove the market had almost nothing to do with Pakistan.
The week, day by day
- Monday: up 155 points to 166,564 after profit-booking
- Tuesday: up 1,455 points to 168,018
- Wednesday: up 3,995 points, reclaiming 172,000
- Thursday: up 3,366 points to 175,380
- Friday: down 1,493 points to 173,887 on profit-taking before a long weekend
- Average daily volume up 43 percent to 856 million shares; traded value up 24 percent to $103 million
Volume rising 43 percent while value rose only 24 percent is worth noting. More shares changed hands than the money involved would suggest, which points to activity concentrated in lower-priced stocks rather than broad institutional accumulation.
An oil price, two thousand miles away
Brent closed the week at about $98.5 a barrel against a weekly average above $115 — a fall of roughly 15 percent. JS Global attributed the drop to Iran signalling openness to talks to end the war; Arif Habib Limited pointed to the Democrats’ US midterm victory, after which oil fell sharply on 4 November.
For Pakistan the transmission is direct and large. Energy dominates the import bill, the State Bank’s $71 billion FY27 import projection is explicitly driven by energy costs, and the Monetary Policy Committee named Middle East escalation as a reason for raising rates. A sustained oil retreat relieves the import bill, the inflation path and the case for tight money simultaneously.
The pump prices moved immediately: petrol down Rs25.32 to Rs352.59 a litre and high-speed diesel down Rs20.71 to Rs382.25, cuts of 6.7 and 5.1 percent.
Related: Inflation falls to 9.61pc — eight days after the State Bank raised rates to 12pc
The domestic news was supporting, not leading
Pakistani data did help. October inflation came in at 9.6 percent, down from 10.3 percent and below double digits for the first time in three months. State Bank reserves rose $39 million to $21.56 billion. A Treasury bill auction raised Rs385.6 billion against a Rs350 billion target, with yields falling between 0.4 and 12 basis points.
Falling T-bill yields in the week after a rate hike is the detail that reveals what the market thinks. The policy rate went up; the price of government paper went up too, meaning investors are positioning for rates to come down rather than up again.
Against that, the October trade deficit came in at $3.9 billion with exports up only 2.8 percent, and public debt rose Rs6.2 trillion to Rs91 trillion in FY26. Neither dented the rally.
What a geopolitical rally is worth
A market that rises 4.5 percent because a foreign conflict may be de-escalating can fall the same amount if it does not. The driver here is a negotiating posture, not a signed agreement, and Iran’s openness to talks has not yet produced one.
That is not a reason to dismiss the move. Pakistan’s exposure to oil is real, and repricing that exposure when the probability of relief changes is what markets are supposed to do. It does mean the gain is contingent in a way that an earnings-driven rally would not be.
Friday’s 1,493-point fall, before a long weekend, suggests some participants reached the same conclusion.
What 173,887 is measured against
Index levels above 170,000 invite a question the daily coverage rarely addresses: what does a number that large actually represent?
The KSE-100 is a price index denominated in rupees, and the rupee has lost a great deal of purchasing power over the period the index has been rising. A market that doubles in nominal terms while prices rise substantially has delivered far less in real terms, and almost nothing to an investor measuring in dollars.
Last week is the clean case for the opposite reading. Over five days the rupee barely moved, holding near Rs276.66, so a 4.5 percent nominal gain was close to a 4.5 percent real one. Currency stability is what makes an equity return legible — and it is the thing most at risk if the trade deficit keeps widening at 16 percent.
The bills still arriving
Two items from the same week point the other way on energy costs. CPPA-G is seeking an 8 percent electricity tariff increase, and OGRA has notified a 15.3 percent rise in RLNG prices.
Those are administered prices catching up with earlier import costs, and they feed into the consumer price index on a lag regardless of where Brent trades this week. Transport inflation was already running above 30 percent year on year in October.
So the market is pricing cheaper energy ahead while households are about to pay more for it. Both can be correct — one is a forward view of crude, the other is a backward adjustment of tariffs — and the gap between them is where the next few inflation prints will be decided.
