The Pakistan Stock Exchange (PSX) soared to new heights on Thursday, with the benchmark KSE-100 Index crossing the 125,000 mark for the first time in the bourse’s history.

The index gained 1,138 points in early trading to reach 125,490, marking an increase of nearly 0.91%. This follows Wednesday’s strong performance, when the index surged 2,328 points to close at 124,352.68 — a jump of 1.91% from the previous day’s close of 122,024.44.

Market analysts attributed the bullish trend to across-the-board buying in key sectors including oil and gas exploration, automobiles, pharmaceuticals, cement, steel, and commercial banking. “The momentum is largely driven by post-budget optimism and clarity on the government’s economic direction,” said a senior market analyst.

Finance Minister Muhammad Aurangzeb, speaking at a post-budget conference on Wednesday, stated that the government had agreed with the International Monetary Fund (IMF) on budgetary targets, adding that an additional Rs500 billion in revenue measures could be introduced next fiscal year if enabling legislation was not passed by parliament.

The federal budget 2025-26, presented in the National Assembly on Tuesday, envisages a total outlay of Rs17.573 trillion, with a GDP growth target of 4.2% — a notable jump from the current year’s 2.7%.

Investors appeared to respond positively to these developments, taking fresh positions in cyclical stocks amid hopes of stability and growth in the coming months.

Trading activity remained robust, with strong participation recorded in the shares of cement, refinery, auto, and oil marketing companies. Market watchers noted that foreign interest also played a role in sustaining the rally.

Meanwhile, global markets were subdued amid renewed geopolitical tensions and cautious sentiment over US-China trade dynamics. MSCI’s Asia-Pacific index outside Japan dipped 0.3%, while Japan’s Nikkei fell 0.7%. In Hong Kong, the Hang Seng Index lost 0.74% following a strong session earlier in the week.

The international mood was also affected by uncertainty stemming from US tariff policy and tensions in the Middle East, which weighed on investor sentiment globally.

Despite global headwinds, the PSX appears to be defying the trend, with domestic catalysts fuelling optimism and record-breaking gains.

“This rally reflects a combination of fiscal optimism, institutional buying, and investor appetite for equities amid improving macroeconomic indicators,” said another broker at a leading securities firm. “Sustainability will depend on the actual implementation of the budget and the government's ability to deliver on its reform commitments.”