Karachi: The benchmark KSE-100 Index continued its upward trajectory, closing the second week of the year at 184,409 points, marking a 3% increase over the previous week. The rally, primarily driven by the banking sector, saw banks contributing 57% to the index's gains, while the cement and auto sectors provided additional but limited support.

Market participation showed significant improvement, with average daily traded volumes increasing by 25% compared to the previous week. On the macroeconomic front, Pakistan recorded monthly remittances of $3.6 billion in December 2025, which is a 17% increase compared to the same period last year. For the first half of the fiscal year 2026, remittances totaled $19.7 billion, reflecting an 11% rise year-on-year, offering some relief to the external account.

In terms of public finance, total public debt decreased by Rs345 billion to Rs77.5 trillion during the first five months of the fiscal year 2026. This reduction was largely facilitated by the transfer of profits from the State Bank of Pakistan to the government.

The government is exploring policy measures to seek relief from the International Monetary Fund in anticipation of the fiscal year 2027 budget. Proposals under consideration include a phased reduction in super tax over four years and lower power tariffs aimed at enhancing economic competitiveness.

In other financial developments, the gas sector's circular debt rose to Rs3.2 trillion, primarily due to a significant increase in late payment surcharges amounting to Rs1.45 trillion. Meanwhile, the government successfully raised Rs979 billion in the most recent treasury bill auction, exceeding the target of Rs850 billion, with yields falling by 29 to 33 basis points across different tenors. The State Bank of Pakistan's reserves saw a modest increase, rising by $141 million to $16 billion.