The Ultimate PSX Investor Glossary: Every Term You Need to Know

Navigating the Pakistan Stock Exchange (PSX) requires fluency in a new language. Market indices, tax terms, settlement cycles, and regulatory bodies can quickly overwhelm new investors and even confuse experienced traders.

This glossary is designed to remove that barrier.

We’ve compiled and explained the most important terms used across the PSX ecosystem — from basic trading concepts to regulatory and Shariah-compliance frameworks. Whether you are opening your first CDS account, managing a diversified portfolio, or investing from abroad, this guide provides the clarity you need to make confident, informed decisions.

Last updated: 2026 (Regulatory rules, tax rates, and settlement systems may change. Always consult official notifications or licensed professionals.)

How to Use This Glossary

• Terms are arranged alphabetically for quick reference
• Use it alongside annual reports, brokerage statements, and market summaries
• Bookmark this page — it’s a living resource updated as PSX rules evolve

A – C: The Building Blocks

All Share Index

The PSX All Share Index tracks the performance of every company listed on the exchange. While the KSE-100 focuses on the largest companies, the All Share Index provides a broader view of the entire Pakistani equity market.

Bear Market

A bear market occurs when stock prices fall by 20% or more from recent highs. This period is usually marked by widespread pessimism and a lack of investor confidence. In Pakistan, bear markets often coincide with high interest rates or macroeconomic uncertainty.

Bull Market

A bull market is the opposite of a bear market. It represents a period where stock prices are rising or are expected to rise. Investors in a bull market are optimistic, and trading volumes typically increase as more people enter the market.

Capital Gains Tax (CGT)

CGT is the tax you pay on the profit earned from selling shares. In Pakistan, the Federal Board of Revenue (FBR) sets different CGT rates for “Filers” and “Non-Filers.” Understanding your CGT obligations is essential for calculating your actual net returns.

CDC (Central Depository Company)

The CDC is the institution that holds your shares in electronic form. Before the CDC, investors held physical paper certificates. Today, your CDC sub-account ensures your investments are secure, transparent, and easy to transfer.

D – F: Valuation and Ownership

Dividend Yield

The dividend yield is a financial ratio that shows how much a company pays out in dividends each year relative to its stock price. It is expressed as a percentage. For income-focused investors in Pakistan, high-yield stocks in the energy or fertilizer sectors are often a priority.

EPS (Earnings Per Share)

EPS indicates a company’s profitability. It is calculated by dividing the company’s net profit by the total number of outstanding shares. A rising EPS is generally a strong signal of a healthy, growing business.

Free Float

Free float refers to the portion of a company’s shares that are actually available for public trading. It excludes shares held by promoters, the government, or locked-in insiders. Stocks with a high free float are usually more liquid and easier to buy or sell.

G – L: Market Mechanics

KSE-100 Index

The KSE-100 is the benchmark index for the Pakistan Stock Exchange. It comprises the 100 largest companies by market capitalisation and serves as the primary indicator of the country’s economic health.

LDCP (Last Day Closing Price)

The LDCP is the price at which a stock finished trading on the previous business day. This figure serves as the starting point for today’s price fluctuations and circuit breakers.

Limit Order

A limit order is an instruction to buy or sell a stock at a specific price or better. Unlike a “Market Order,” a limit order gives you control over the execution price, which is vital in a volatile market like the PSX.

M – O: Operational Excellence

Market Capitalisation (Market Cap)

Market Capitalisation is the total market value of a company’s outstanding shares. It is calculated by multiplying the current share price by the total number of shares issued. In Pakistan, companies are often categorised as Large-Cap (Blue Chips), Mid-Cap, or Small-Cap based on this figure.

Margin Call

A margin call occurs when the value of an investor’s margin account falls below the broker’s required amount. The broker will then demand that the investor deposit additional cash or securities to cover possible losses. In the PSX, managing leverage is vital to avoid forced liquidation during market corrections.

NCCPL (National Clearing Company of Pakistan Limited)

The NCCPL is a central institution that provides clearing and settlement services for all trades executed on the PSX. It acts as a central counterparty, guaranteeing that the buyer receives the shares and the seller receives the payment, thereby reducing systemic risk in the market.

NIT (National Investment Trust)

NIT is the first and largest asset management company in Pakistan. It manages various mutual funds and has historically played a significant role in stabilising market sentiment through institutional participation.

P – R: Performance and Regulation

PE Ratio (Price-to-Earnings Ratio)

The P/E ratio is a key valuation metric calculated by dividing the current share price by earnings per share (EPS). It indicates how much investors are willing to pay for every rupee of a company’s profit. A high PE may signal strong growth expectations, while a low PE may indicate an undervalued stock.

Payout Date

The payout date is the day on which a company actually distributes the declared dividend or bonus shares to its eligible shareholders. This usually occurs a few weeks after the ‘Book Closure’ period.

RDA (Roshan Digital Account)

The Roshan Digital Account is a landmark initiative by the State Bank of Pakistan (SBP) for Non-Resident Pakistanis (NRPs). It allows overseas Pakistanis to invest directly in the PSX, buy government bonds (Naya Pakistan Certificates), and manage local banking needs entirely online.

RSI (Relative Strength Index)

RSI is a technical momentum indicator that measures the speed and change of price movements. It ranges from 0 to 100. Traditionally, an RSI above 70 suggests a stock is ‘Overbought’, while an RSI below 30 suggests it is ‘Oversold’.

S – U: Shariah and Structure

SECP (Securities and Exchange Commission of Pakistan)

The SECP is the apex regulator of the corporate sector and capital markets in Pakistan. Its mission is to develop a modern, efficient corporate sector and a capital market grounded in sound regulatory principles to protect investor interests.

Shariah-Compliant Stocks

These are shares of companies that meet specific Islamic investment criteria. In Pakistan, companies are screened based on their business activities (avoiding interest-based finance, gambling, or prohibited goods) and financial ratios (debt-to-asset limits). The KMI-30 index tracks the top-performing Shariah-compliant firms.

Sukuk (Islamic Bonds)

Sukuk are Shariah-compliant securities that represent a fractional ownership interest in an existing or well-defined future asset. Unlike conventional bonds, which pay interest (Riba), Sukuk holders earn a share of the profit generated by the underlying asset.

T+1 Settlement

Since 9 February 2026, the PSX operates on a T+1 settlement cycle. This means that when you buy or sell a stock, the actual transfer of shares and funds is completed one business day after the trade date (Transaction + 1 day).

V – Z: Volume and Value

Volume

Volume represents the total number of shares traded in a particular stock or the entire market during a given period. High volume often confirms price trends and indicates strong investor interest.

Yield

Yield is the income return on an investment, such as the interest or dividends received. It is usually expressed as an annual percentage based on the investment’s cost or current market value.

Zero-Coupon Bond

A bond that does not make periodic interest payments. Instead, it is issued at a deep discount to its face value. The investor’s return is the difference between the discounted purchase price and the full face value paid at maturity.