KSE-100 is not an average of 100 stocks
The benchmark is free-float weighted, built for sector representation and published in two versions. That changes how an index move should be read.
Executive summary
Executive Summary
01The KSE-100 contains 100 companies, but each company does not get an equal vote. Weight follows free-float market capitalization.
02PSX first selects the largest free-float company from each eligible sector. It fills the remaining places with the largest eligible companies by free-float market capitalization.
03The KSE-100 is a total-return index, so cash dividends and other corporate actions are adjusted. KSE-100PR tracks price return and does not include gross cash dividends.
04PSX recomposes the index twice a year. The latest notice reviewed September 2025 to February 2026 data and took effect on 1 April 2026.
Sector leaders plus largest free-float names
Of PSX free-float market cap in the methodology brochure
April and October implementation
Total return and price return
Read this first
The basis of comparison
- Free float
- Shares readily available for normal trading. Sponsor, government and other locked-in holdings are generally excluded.
- Free-float market cap
- Share price multiplied by the shares treated as free float, not every share the company has issued.
- Index divisor
- A calculation tool that keeps the index comparable when constituents or corporate actions change.
Finding
Selection happens in two passes
Sector representation comes first. Size fills the remaining seats.
Under the June 2025 methodology, PSX selects the largest free-float company from each of 36 eligible sectors. Open-end mutual funds and exchange-traded funds are excluded from that sector step.
The remaining companies are selected in descending order of free-float market capitalization until the index reaches 100 constituents. A company can therefore be in the benchmark because it leads its sector or because it is among the largest remaining free-float names.
| Pass | Rule | Purpose |
|---|---|---|
| 1 | Largest free-float company in each eligible sector | Sector representation |
| 2 | Largest remaining companies by free-float market cap | Fill the index to 100 |
| Eligibility | Minimum free float, trading and other rule checks | Keep constituents investable and representative |
Finding
One large free-float company can outweigh several smaller names
The index level is driven by weights, not by counting how many stocks rose or fell.
A company with more free-float market value has a larger effect on the index. A day when many small constituents rise can still produce a falling index if a few heavily weighted companies fall enough.
This is why an index headline and the broader market can feel different. To read the session properly, check the index move, the number of advancing and declining stocks, sector moves and trading value separately.
Finding
KSE-100 and KSE-100PR answer different questions
The familiar KSE-100 includes the effect of cash dividends. KSE-100PR is the price-only version.
Both variants adjust for bonus and right issues. The difference is cash dividends: KSE-100 adjusts for them, while KSE-100PR does not.
When comparing performance with another index, fund or stock, first check whether each series is total return or price return. A mixed comparison can make one side look better simply because dividends are counted on only one side.
| Feature | KSE-100 | KSE-100PR |
|---|---|---|
| Cash dividends | Included through adjustment | Not included |
| Bonus adjustment | Yes | Yes |
| Right adjustment | Yes | Yes |
| Best used for | Total-return comparison | Price-movement comparison |
Finding
The April 2026 recomposition changed four names
Arif Habib Corporation and Power Cement entered. Unity Foods and Pakgen Power left under the market-capitalization rule.
PSX based that review on data from September 2025 through February 2026 and implemented the change on 1 April 2026.
The regular schedule uses the last working day of February for an April implementation and the last working day of August for an October implementation. PSX can also make a special recomposition after events such as a merger or voluntary delisting.
| Incoming | Outgoing | Reason |
|---|---|---|
| Arif Habib Corporation Limited | Unity Foods Limited | Market-capitalization rule |
| Power Cement Limited | Pakgen Power Limited | Market-capitalization rule |
Next checks
Questions the next source should answer
- Which index variant does the chart or headline use: total return or price return?
- Is the move concentrated in a few large weights or spread across the market?
- Is the constituent list current for the period being studied?
- Are dividends included on both sides of a performance comparison?
Limits
Caveats and assumptions
- This guide explains the official methodology. It does not provide a live index level, live weights or a trading signal.
- The methodology brochure was updated in June 2025. The constituent example uses the PSX notice effective 1 April 2026.
- PSX can change rules or make a special recomposition. Use the latest official notice for a current constituent list.
- The stated 70% to 80% coverage is the approximate range published by PSX, not a Tijarat calculation.
Official record
Sources
- 01Pakistan Stock ExchangeKSE-100 and KSE-100PR index brochure covering index methodology ↗
Updated June 2025. Primary methodology for objective, selection, free float, recomposition and corporate actions.
- 02Pakistan Stock ExchangeRe-composition of KSE-100 and KSE-100PR index ↗
13 March 2026; effective 1 April 2026. Official incoming and outgoing constituents for the April 2026 implementation.
Investment in securities market is subject to market risks.
Read all the related documents carefully before investing. This note is for education and does not consider your objectives, finances or risk tolerance.