The equity market on Tuesday extended its bullish rally, with benchmark index gaining over 1200 points during the opening minutes of the session.

The Pakistan Stock Exchange’s (PSX) KSE-100 Index climbed to an intraday high of 137,727.63, gaining 1225.1 points, or 0.88%, while touching a low of 136,498.16.

The market rally is driven by a surge in workers' remittances, robust auto sales, and improved foreign exchange reserves.

Mohammad Sohail, the CEO of Topline Securities, said aggressive buying by local funds have resulted in index touching new all-time high of 137,000.

“This recent rally is led by banking stocks as investors feel that banks dividend payout will remain attractive,” he added.

"There seems to be consolidation post a super sharp rally but fundamentals remain intact for a bull rally. All eyes on earnings season now," said economist and expert AAH Soomro.

Pakistan received its highest-ever annual workers' remittances, totalling $38.3 billion for FY25, up 27% year-on-year (YoY). June alone saw inflows of $3.4 billion, an 8.0% increase compared to the same month last year. This inflow significantly strengthened the country’s external position, lifting investor confidence.

Additionally, the State Bank of Pakistan (SBP) reported that its foreign exchange reserves jumped by $1.8 billion week-on-week to reach $14.5 billion for the week ended July 4, marking a 39-month high.

With commercial bank reserves included, the country’s total foreign reserves have now crossed the $20 billion mark for the first time in three years. Analysts anticipate continued positive sentiment this week, backed by record-breaking remittances, elevated foreign exchange reserves, and improved macroeconomic indicators.

Investor focus will likely remain on corporate earnings, the planned Panda bond issuance, and further developments on foreign funding and debt management.

A day earlier, Finance Minister Muhammad Aurangzeb hinted at the possibility of an interest rate cut, saying there is space for monetary easing but the final decision lies with the SBP.

The SBP, in its last meeting, held the key policy rate steady at 11%, citing inflationary risks and external uncertainties triggered by the Iran-Israel conflict.

The central bank had lowered the interest rate by 100 basis points (bps) to 11% on May 5. The central bank had cut the rate by 1,100 basis points since June from an all-time high of 22%.

This is a developing story and is being updated with further details.