Glossary · Investing Basics
Index
A statistical measure tracking the performance of a selected group of securities. The KSE-100 Index is Pakistan's primary benchmark, representing the 100 largest companies listed on the PSX by market capitalisation.
01—What is Index?
The definition — and what it means in practice.
An index is a statistical measure that tracks the performance of a selected group of securities as if they were one portfolio. The basket follows set rules on which securities are included and how each is weighted, so the index level moves up or down as its constituents’ prices change. Investors use indices to summarise broad market moves without looking at every individual share.
Indices matter because they provide a benchmark for judging performance and risk. If your portfolio rises but the relevant index rises more, you may have underperformed after costs and taxes. Indices also help you compare sectors, strategies, and time periods consistently. Many research reports, news headlines, and fund fact sheets reference index returns, so understanding what an index includes (and excludes) improves decision-making.
If a basket of shares is “the market”, an index is its scorecard: if the basket rises about 10%, the index level rises about 10% too.
- An index tracks a defined basket of securities using published inclusion and weighting rules.
- It is a benchmark, not an investable asset by itself (unless accessed via a fund or product).
- Different indices can give different pictures of “the market” depending on constituents and weights.
- Index moves reflect price changes in constituents; income (like dividends) may be treated differently by different index methodologies.
02—How index works on the PSX
The Pakistan-specific rules, conventions, and numbers.
On the Pakistan Stock Exchange (PSX), the KSE-100 Index is the primary benchmark and represents the 100 largest listed companies by market capitalisation. It is a free-float benchmark with a semi-annual review. Other commonly followed PSX indices include the KSE-30 (liquid large-cap shares) and the KMI-30 (a Shariah benchmark built using AAOIFI-based screens with PSX and Al Meezan), plus the KMI All Shares for all compliant listings.
A PSX investor typically encounters indices in daily market commentary, portfolio performance comparisons, and screening tools that show whether a stock is in a major benchmark. Index membership can affect visibility and trading interest because benchmarks are widely referenced. When you compare returns, choose an index that matches your universe (for example, a Shariah screen versus a broad-market benchmark) so the comparison is meaningful.
03—Common misconceptions
Where investors most often get this wrong.
If the index is up, most PSX shares must be up.
Not necessarily. Large, heavily weighted shares can move an index even if many smaller constituents fall. Breadth can differ from the headline index move.
An index is the same thing as a fund that tracks it.
An index is just a calculation. A fund (such as an index fund) is a product that tries to replicate the index and has costs, tracking error, and operational constraints.
One index represents the whole PSX equally.
Each index has its own selection and weighting rules. The KSE-100, KSE-30, and KMI-30 can behave differently because they track different baskets.
04—Using index on BSL
Where this term shows up across the platform — with live data.
- View major benchmarks on our Market page.
- Track the KSE-100 benchmark on the KSE-100 Index page.
- Compare large-cap liquidity-focused performance via the KSE-30 Index page.
- Explore Shariah-screened benchmarks using the KMI-30 page.
05—Frequently asked questions
What investors ask about index on the PSX.
Frequently Asked Questions
The KSE-100 is Pakistan’s primary PSX benchmark index. It represents 100 of the largest listed companies by market capitalisation and is calculated as a free-float benchmark with a semi-annual review.
You cannot buy an index directly because it is a statistical measure, not a security. To get index-like exposure, investors typically use products designed to track an index, such as an index fund.
They track different baskets and use different rules. For example, a liquidity-focused index may behave differently from a broad benchmark, and a Shariah-screened index will exclude non-compliant listings.
An index primarily reflects price movements of its constituents. Whether dividends are reflected depends on the specific index methodology (for example, price return versus total return versions). Always check which return type a quoted figure refers to.
Use an index that matches what you invest in (broad market, large-cap, or Shariah-screened). Then compare your portfolio return to that benchmark over the same period, remembering that taxes and trading costs affect your realised results.
06—Related terms
Keep building the picture.
The primary benchmark index of the Pakistan Stock Exchange, comprising the 100 largest listed companies by market capitalisation across all sectors. Widely used as a barometer of Pakistan's equity market performance.
An index of the 30 largest and most liquid companies on the PSX, selected based on free-float market capitalisation and used as a tradable index for certain derivative products.
The Karachi Meezan Index, tracking the 30 most liquid Shariah-compliant stocks listed on the PSX. Serves as the benchmark for Islamic investors in Pakistan.
The PSX All Share Index tracks the performance of every company listed on the exchange. While the KSE-100 focuses on the largest 100 companies, the All Share Index provides a broader view of the entire Pakistani equity market.
A mutual fund designed to replicate the performance of a specific market index by holding the same securities in the same proportions. Offers broad market exposure at a lower cost than actively managed funds.
The total market value of a company's outstanding shares, calculated by multiplying the share price by the number of shares in circulation and used to classify companies as large-cap, mid-cap, or small-cap.
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