Investor optimism returned to the equity market on Thursday as strong macroeconomic indicators, robust remittance inflows and stronger-than-expected government debt auctions fuelled gains in the banking sector, reversing losses from the previous session.

The equity market bounced back on Thursday, led by gains in the banking sector and strong macroeconomic indicators, as investors reacted positively to record-high remittances and upbeat results from the government’s latest debt auctions.

“Overall improvement in macroeconomic indicators is rerating the market with rise in banks leading the index. This rally will mature to form a new base above 130,000,” said independent investment and economic analyst AAH Soomro.

The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index surged by 1,205.36 points, or 0.91%, to close at 133,782.34 points, up from the previous close of 132,576.98.

During the session, the index gained 1,325.36 points, or 1%, to touch an intraday high of 133,902.34points, up from the previous close of 132,576.98. The index hit a low of 132,706.02 during the session before rallying.

Investor confidence was buoyed by data from the State Bank of Pakistan (SBP) showing workers’ remittances hit an all-time high of $38.3 billion in FY2025 — a 26.6% year-on-year increase.

In June alone, remittances stood at $3.4 billion, up 7.9% from a year earlier. Although monthly inflows dipped 8% from May, the annual total surpassed both the official $38 billion target and the country’s export earnings of $32.1 billion.

The SBP’s foreign exchange reserves rose by $5.12 billion in FY25 to $14.51 billion, nearly five times higher than levels seen at the start of 2023. The average monthly remittances during FY25 stood at $3.19 billion, compared to $2.52 billion in FY24.

Separately, the government raised Rs1.41 trillion through Treasury bill auctions, exceeding its Rs1.35 trillion target. Yields on the one-month paper rose by 24 basis points to 11.2403%, while yields on other tenures remained steady or declined slightly.

In the auction for floating-rate Pakistan Investment Bonds, Rs208 billion was raised against Rs300 billion target amid strong investor participation.

On Wednesday, the KSE-100 Index had declined by 826.21 points, or 0.62%, to settle at 132,576.98 points. The highest index of the day remained at 133,566.38 points, while the lowest level was recorded at 132,326.18 points.