The Pakistan Stock Exchange (PSX) kicked off the new week on a record-breaking note, as the KSE-100 Index soared beyond the 133,000 mark for the first time ever, driven by upbeat trade talks, improving economic stability, and a promising earnings season.

The benchmark KSE-100 closed at 133,370.14 points on Monday, rising 1,421.08 points, or 1.08%, from the previous close of 131,949.06. During intraday trade, the index touched a historic high of 133,862.01 points, showing a remarkable gain of 1,912.95 points, or 1.45%, while the session’s low stood at 132,467.12 points.

Market watchers credit this rally to several key drivers. According to Ahfaz Mustafa, CEO of Ismail Iqbal Securities, “The tariff deal optimism and continuous positive vibes in the market have fueled this rally. With the earnings season approaching and multiple technical highs breached, the momentum is unlikely to slow down anytime soon.”

Investor sentiment remained upbeat thanks to falling inflation trends, stronger foreign exchange reserves, and renewed capital inflows. Analysts believe that the positive outlook will likely continue, as investors shift their focus from fixed-income securities to equities, driven by higher taxes on alternative investments and declining yields.

The Pakistan Stock Exchange ended FY25 as the region's top-performing market, delivering an impressive 60% total return. This bullish energy has spilled over into FY26, with the KSE-100 blazing past the 133,000 mark, firmly planting itself in uncharted territory. Meanwhile, average daily traded volumes surged 31% week-on-week, reflecting heightened investor participation and growing confidence.

A major source of this economic confidence comes from Pakistan securing $3.4 billion in Chinese rollover and refinancing, along with $1.5 billion from Middle Eastern lenders and multilateral institutions. The State Bank of Pakistan's foreign exchange reserves also stood strong at $14.51 billion as of June 30.

Another positive signal came from the latest inflation data. Pakistan’s Consumer Price Index (CPI) for June cooled to 3.2% year-on-year, slashing FY25's average inflation to 4.5%, a steep decline from 23.4% in FY24. This opens up possibilities for interest rate cuts, making the Pakistan stock market rally even more attractive to investors looking for higher returns.