Karachi: The KSE-100 Index continued its upward trajectory this week, closing at 171,404, marking a 0.9% increase from the previous week. The rise comes as the State Bank of Pakistan's unexpected 50 basis point cut in the policy rate to 10.5% bolstered market sentiment.

Despite the positive market movement, the Average Daily Trading Volume fell by 5% week-over-week. The central bank's decision to cut rates was influenced by stable inflation, aided by moderate global commodity prices and well-managed inflation expectations.

On the external economic front, Pakistan posted a current account surplus of $100 million in November 2025, a reversal from the $291 million deficit in October 2025. This shift was largely driven by a 15% month-over-month decline in imports. However, the current account showed a deficit of $812 million for the first five months of FY26, compared to a surplus of $502 million in the same period the previous year.

Large-scale manufacturing output showed a recovery with an 8.3% year-over-year increase in October 2025, contributing to a cumulative growth of 5% year-over-year for the first four months of FY26. In contrast, foreign direct investment fell by 25% year-over-year to $927 million in the same period.

Amid these economic changes, Pakistan is seeking additional financing from the Asian Development Bank to refinance its Rs1.7 trillion power sector circular debt under more favorable terms. Additionally, the government successfully raised Rs445 billion in the latest Pakistan Investment Bonds auction, surpassing a target of Rs400 billion, with yields declining by 25-75 basis points across different tenors.

Furthermore, the State Bank of Pakistan's reserves increased by $1.3 billion to $15.89 billion, reflecting inflows from the International Monetary Fund.