Stocks moved within a tight band on Friday as mutual fund activity, robust earnings, and optimism over economic prospects kept the equity market steady.

The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index climbed to an intraday high of 147,534.41, gaining 1,005.11 points, or 0.69%, before retreating to a low of 146,894.62, reflecting a fall of 35.22 points, or 0.02%.

“It’s a range bound activity nowadays led by mutual funds’ liquidity and earnings seasons. Moody’s credit rating is already incorporated,” added AAH Soomro, an independent investment and economic analyst.

“Better results, expectations of further improvement in economic environment are driving the market,” said Samiullah Tariq, Head of Research and Development at Pakistan Kuwait Investment Company.

Moody’s upgraded Pakistan’s credit rating from Caa2 to Caa1, citing an improved external position and progress on reforms under the IMF (International Monetary Fund) Extended Fund Facility (EFF) programme.

The agency noted that foreign exchange reserves are likely to continue improving, though dependent on timely financing from official partners, while fiscal strengthening is supported by a broader tax base. However, it cautioned that debt affordability remains among the weakest globally, with governance and political uncertainty still high.

This marks the third upgrade in four months, following similar moves by S&P Global Ratings and Fitch Ratings, underpinned by Prime Minister Shehbaz Sharif’s government’s commitment to fiscal consolidation and reforms.

On the performance front, Pakistan secured the top global spot for equity returns in USD over FY24–FY25 combined, Bloomberg data showed. In FY25 alone, Pakistan ranked eighth globally but outperformed regional peers, returning far more than India’s BSE Sensex (+3.2%), China (+14.8%) and India’s broader market (+6%), according to AHL data.

The State Bank of Pakistan’s (SBP) latest Monetary Policy Report (MPR) projected GDP growth at 3.25–4.25% in FY26 and a current account deficit between zero and 1.0% of GDP.

With the policy rate maintained at 11% in June and July, the SBP expects the real policy rate to remain positive to stabilise inflation within target. Reserves are forecast to reach $15.5 billion by end-December 2025, supported by projected financial inflows and continued SBP FX purchases.

On Wednesday, the KSE-100 decreased by 476.02 points, or 0.32%, to 146,529.31 points from 147,005.32 points recorded in the last session. The highest index of the day remained at 147,892.25 points, while the lowest level was recorded at 146,417.8 points.