A stock market is simply a place where people buy and sell small pieces of companies. In Pakistan, that place is the Pakistan Stock Exchange, or PSX. If you have ever wondered how someone "owns" part of Oil and Gas Development Company or Meezan Bank, this lesson is for you.
You do not need a finance degree. You only need to understand a few ideas, and we will build them one at a time.
What is the Pakistan Stock Exchange?
The PSX is Pakistan's national stock exchange. It was formed in January 2016 when the Karachi, Lahore and Islamabad exchanges merged into one. Today all share trading in Pakistan happens on one electronic system run by PSX, based in Karachi.
The exchange itself does not buy or sell your shares. It runs the marketplace, sets the trading rules and publishes prices. You trade through a licensed stockbroker, called a TREC holder (Trading Right Entitlement Certificate). The broker sends your orders to the PSX system.
Three other bodies keep the system safe:
| Organisation | What it does for you |
|---|---|
| SECP (Securities and Exchange Commission of Pakistan) | The regulator. Licenses brokers and funds, and warns the public about scams. |
| CDC (Central Depository Company) | Holds your shares electronically in a sub-account in your own name. |
| NCCPL (National Clearing Company of Pakistan) | Settles trades, so money and shares change hands correctly. |
Because your shares sit at CDC in your name, they are not the broker's property. That is an important protection, and we cover it again in the lesson on scams.
What is a share?
A company is owned by its shareholders. When a company "lists" on the PSX, it divides its ownership into millions or billions of equal parts called shares. Anyone can then buy some of those shares.
For example, OGDC has about 4.3 billion shares in issue. If you buy 100 OGDC shares, you own a very tiny slice of the company. It is tiny, but it is real. As a shareholder you are entitled to:
- a share of the profits the company decides to pay out (dividends)
- any rise in the value of the company, through the share price
- vote at general meetings, in proportion to your shares
You also carry the risk. If the company does badly, the share price can fall, and dividends can be cut or stopped.
Who sells shares and who buys them?
When a company first lists, it sells new shares to the public in an IPO (initial public offering). The money goes to the company. After that, almost all trading is between investors. When you buy 50 shares of Fauji Fertilizer (FFC), you are buying them from another investor who wanted to sell, not from FFC itself.
This is why the PSX is called a "secondary market". It gives people a way to turn their shares back into cash whenever the market is open.
Why do share prices move?
A share price is simply the last price at which a buyer and a seller agreed to trade. If more people want to buy than sell at the current price, the price rises. If more want to sell, it falls.
What makes people want to buy or sell? Mostly their view of the company's future, plus the mood of the whole market. Common drivers on the PSX include:
- Company results. Higher profits usually push a price up. A bad quarter can push it down.
- Dividends. Announcements of big payouts attract buyers.
- Interest rates. When the State Bank of Pakistan (SBP) raises rates, bank deposits and government bonds become more attractive, and shares often look less appealing. Rate cuts usually help shares.
- Inflation and the rupee. High inflation and a weak rupee raise costs for many companies.
- Oil prices. Pakistan imports most of its oil. A spike hurts the import bill but can help oil and gas producers like OGDC, PPL and MARI.
- IMF and politics. News about IMF reviews, budgets and political stability moves the whole market.
- Global events. On 2 March 2026, after the US-Israel strikes on Iran, the KSE-100 fell 16,089 points (9.57%) in one day, its largest single-day fall in points.
In the short run, prices can move on fear and excitement. Over the long run, they tend to follow a company's profits and dividends.
What is the KSE-100 index?
With hundreds of listed companies, you need a quick way to see whether "the market" went up or down today. That is what an index does.
The KSE-100 is the PSX's main index. It tracks 100 large companies, chosen mainly by free-float market capitalisation (the value of shares actually available to trade). PSX picks the largest company from each sector first, then fills the rest with the biggest companies overall. The list is reviewed twice a year.
The KSE-100 started at a base of 1,000 points in November 1991. On 30 September 2026 it closed at 169,969. When news reports say "the market gained 369 points", they usually mean the KSE-100 rose by that amount.
| Date | KSE-100 level |
|---|---|
| November 1991 (base) | 1,000 |
| 1 October 2021 | 44,872 |
| 23 January 2026 (all-time high) | 189,167 |
| 2 March 2026 (after record fall) | 151,973 |
| 30 September 2026 | 169,969 |
The index does not tell you how any single share did. Some stocks rise on a day the index falls. But it is a good thermometer for the overall mood. You can follow it live on our market page.
Is the stock market gambling?
It can be, if you treat it like gambling: borrowing money, chasing tips, or buying something because it "might double next week". It is not gambling when you buy part-ownership of real businesses that earn profits, at sensible prices, and hold them for years.
The difference is in your behaviour, not in the market. The rest of this course is about building good habits: understanding what you own, spreading your risk, and avoiding scams.
How do ordinary people take part?
There are two main routes:
- Buy shares yourself by opening an account with a licensed broker, which also gives you a CDC sub-account. Our getting started guide walks through this, and our brokers page compares options.
- Buy a mutual fund, where a professional manager invests a pool of money for you. Lesson 11 compares the two.
Either way, only invest money you will not need for several years, and keep an emergency fund in the bank first.
Key points
- The PSX is Pakistan's single stock exchange. You trade through a licensed broker, and your shares are held at CDC in your own name.
- A share is a small piece of ownership in a real company, with a right to its dividends and a stake in its growth.
- Prices move because buyers and sellers change their views, driven by results, interest rates, oil, the IMF and global news.
- The KSE-100 tracks 100 large companies and is the market's main thermometer. It went from 1,000 in 1991 to 169,969 in September 2026.
- Investing becomes gambling only when you behave like a gambler.
Next lesson: How shares make you money. Ready to open an account? See get started.