The Pakistan Stock Exchange (PSX) witnessed a historic surge on Wednesday, as investors gave a resounding vote of confidence to the newly announced federal budget for FY2025-26.

The benchmark KSE-100 Index climbed over 1,600 points during early trading, crossing the 123,000 mark for the first time in history.

By 9:40am, the index was recorded at 123,463.86 — a rise of 1,439.42 points or 1.18% — as across-the-board buying lifted sentiment on the first trading day after the budget presentation. The index opened at 123,415.60 with a gain of 1,391.16 points and recorded an intraday high of 123,723.20. The lowest level in the early session stood at 123,290.25. Total volume in the KSE-100 during this period reached 20.8 million shares.

Market sentiment was buoyed by the absence of any major negative surprises in the budget, especially related to taxation. The decision to maintain the capital gains tax at 15% was seen as a positive for equity investors.

The federal budget 2025-26, presented on Tuesday, carries a total outlay of Rs17.573 trillion. It targets GDP growth of 4.2% for the next fiscal year, compared to 2.7% in the outgoing year. The government has set an inflation target of 7.5%, while the fiscal deficit is projected at 3.9% of GDP, down from 5.9%. The primary surplus is forecasted at 2.4%.

Buying across key sectors

The rally was broad-based, with significant buying observed in commercial banks, oil and gas exploration, cement, fertilizer, and power generation. Major index contributors included HUBCO, PSO, OGDC, MARI, PPL, POL, HBL, MCB, MEBL, and UBL — all trading firmly in the green.

Top-performing stocks during the day were PKGP (+10.00%), MUGHAL (+7.84%), MEHT (+7.05%), HMB (+3.22%), and GADT (+2.99%). On the losing side, ATLH declined by 7.60%, followed by ATRL (-3.37%), CNERGY (-2.86%), FCEPL (-2.60%), and INDU (-1.62%).

In terms of index-point contributions, FFC added 146.48 points, followed by PKGP (+117.13), MEBL (+95.09), LUCK (+91.32), and PPL (+82.43). Companies that pulled the index down included ATLH (-35.87), ATRL (-34.67), INDU (-14.67), CNERGY (-10.90), and FCEPL (-7.20).

Sector-wise, the biggest contributions came from commercial banks (+361.21 points), oil & gas exploration companies (+216.72), fertilizer (+213.03), cement (+204.14), and power generation and distribution (+144.02).

Conversely, the index was slightly held back by automobile assemblers (-49.53 points), refineries (-45.57), chemicals (-2.18), food & personal care products (-1.85), and auto parts & accessories (-0.64).

Of the 100 index companies, 74 closed in the green, 11 in the red, three remained unchanged, and 12 were untraded.

Broader market cautiously optimistic

Internationally, markets remained subdued as investors monitored progress in US-China trade talks and awaited fresh US inflation data. While MSCI’s Asia-Pacific index outside Japan rose 0.2%, Japan’s Nikkei and Australian stocks each posted 0.4% gains.

Despite external caution, the PSX’s strong performance reflects growing investor confidence in the government’s stated economic direction. The finance minister had earlier termed the budget the beginning of a strategy to boost competitiveness, exports, and economic productivity.