Pakistan stocks rallied to new highs on Thursday as the KSE-100 Index jumped 1,776 points to close at 157,954—just shy of the 158,000 psychological barrier.

The surge followed the signing of a landmark Strategic Mutual Defense Agreement between Pakistan and Saudi Arabia, marking an unprecedented strengthening of defense ties between the two countries. Market watchers said the pact not only cements Pakistan’s geopolitical standing in the Middle East but also opens prospects for defense exports, reshaping investor sentiment, noted Ali Najib, Deputy Head of Trading at Arif Habib Ltd.

Adding to the momentum, the US Federal Reserve trimmed its policy rate by 25 basis points and signaled further cuts this year, boosting global risk appetite, he added.

Locally, the government successfully raised Rs195 billion in T-bills against a Rs175 billion target while rejecting high-priced PIB bids—moves seen as reflecting confidence in easing monetary conditions and channeling fresh funds into equities.

Blue-chip stocks led the charge, with Engro Fertilizers, National Bank of Pakistan, Mari Petroleum, Bank of Punjab, and United Bank Ltd collectively contributing 734 points to the day’s gain. Market liquidity surged as volumes rose to 1.96 billion shares worth Rs56.9 billion, led by Cnergyico, which dominated trade with over 213 million shares.

Analysts said the KSE-100 is now trading above its 155,000–158,000 consolidation band, and a decisive breakout could propel the market into uncharted territory, setting the stage for new record highs.