Bullish sentiment gripped the equity market on Monday as investors chased fresh highs, buoyed by anticipation for corporate earnings and renewed signs of macroeconomic stability.

“Stocks trading at new all time [high] amid speculations ahead of major earnings announcements due this week.,” said Ahsan Mehanti, Managing Director and CEO of Arif Habib Commodities.

"Strong financial results, rupee stability and thin inflation data played catalyst role in bullish activity at PSX,” he added.

The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index settled at a fresh all-time closing high of 142,052.64 points, up 1,017.66 points, or 0.72%, from the previous close of 141,034.98.

The index climbed to an intraday high of 142,323.34, gaining 1,288.36 points, or 0.91%, while touching a low of 141,034.98, reflecting an increase of 405.5 points, or 0.29%, from the previous close of 141,034.98.

Analysts expect the upward trend to persist, bolstered by anticipation around upcoming corporate earnings and developments in the resolution of the circular debt issue.

While the Monetary Policy Committee (MPC) held the key interest rate at 11%, defying expectations of a 50 to 100 basis point cut, the decision came amid inflation concerns. Headline inflation rose to 4.1% year-on-year in July, up from 3.2% in June, driven by a fading base effect and cost-side pressures.

The Sensitive Price Index (SPI) recorded a 0.9% year-on-year decline in July, compared to a 1.9% fall in June and a 15.7% increase in July 2024. On a month-on-month basis, SPI rose 3.1% in July 2025.

On the currency front, the rupee appreciated for the second consecutive week, closing at Rs282.72 per US dollar, up 0.26% from the previous week. The gains were supported by enforcement actions against the black market, reportedly following meetings between exchange dealers and intelligence officials.

The government reported positive fiscal performance, with the Federal Board of Revenue (FBR) surpassing its July revenue target by Rs7 billion, collecting Rs755 billion. Meanwhile, the rupee appreciated 0.26% week-on-week to close at Rs282.72 per US dollar, supported by continued crackdowns on the informal currency market.

However, the State Bank of Pakistan (SBP) reported a decline of $153 million in its foreign exchange reserves, now standing at $14.3 billion as of July 25. The reversal of the Rs7.41 per unit electricity tariff relief introduced earlier this year has added further cost-side inflationary pressures.

On Friday, the KSE-100 Index had settled at 141,034.98 points, up 1,644.56 points, or 1.18%, from the previous close of 139,390.42. The index had touched a high of 141,160.93 and a low of 138,957.70 during the session. 

The bourse ended the week at an all-time closing high, recording a cumulative gain of 1,828 points, or 1.31%, for the week.