KMI-30 vs KSE-100: Which PSX Index Should You Actually Track in 2026

Every PSX news headline references "the market" — usually meaning the KSE-100 index. But the KSE-100 is not "the market" for a lot of Pakistani retail investors. If you're a Shariah-compliant investor, if you avoid conventional banks, or if you want a purer read on Pakistan's tradeable equity opportunity set, the KMI-30 might actually be the index you should track.

This piece breaks down what each index is, how they differ in composition and behavior, and which is more useful for which type of investor.

What the KSE-100 actually is

The KSE-100 is a free-float capitalization-weighted index of the top 100 companies on the Pakistan Stock Exchange by market capitalization, subject to some sector-cap rules to prevent one sector dominating.

Key facts:

• Constituents: 100 largest companies by float-adjusted market cap
• Rebalanced: semi-annually (typically January and July)
• Weighting: free-float market cap (the shares actually available to trade, not insider holdings)
• Sector caps: no single sector can exceed 40% of the index
• Purpose: broad benchmark of PSX overall performance

Because it's cap-weighted, the biggest companies drive most of the movement. Banks and oil & gas typically dominate — together they can be 40-50% of the index at any given time.

What the KMI-30 actually is

The KMI-30 (Karachi Meezan Islamic Index) is a Shariah-compliant subset of PSX — the 30 largest compliant companies by market cap.

Key facts:

• Constituents: 30 largest Shariah-compliant companies
• Rebalanced: semi-annually with the KMI review
• Screening: passes SECP Shariah screens (no conventional banking, no interest-heavy debt, no impermissible business lines)
• Weighting: free-float market cap, capped per constituent to avoid concentration
• Purpose: benchmark for Islamic mutual funds and Shariah-compliant portfolios

Because conventional banks are excluded, KMI-30 has zero direct exposure to Pakistan's largest single sector. Instead it tilts toward fertilizer, cement, oil & gas, pharmaceuticals, and Islamic banks (Meezan, BankIslami).

The composition differences that matter

A rough breakdown of typical sector weights (varies with each rebalancing):

| Sector | KSE-100 | KMI-30 | |---|---:|---:| | Banks (conventional) | ~25-30% | 0% | | Islamic banks | ~2-5% | ~10-15% | | Fertilizer | ~10-12% | ~20-25% | | Cement | ~8-10% | ~10-15% | | Oil & Gas (E&P) | ~10-15% | ~15-20% | | Power (IPPs) | ~5-8% | ~8-12% | | Pharmaceuticals | ~3-5% | ~5-8% | | Automobiles | ~3-4% | ~5-7% | | Textiles | ~4-5% | ~3-5% | | Everything else | remainder | remainder |

The biggest difference is banking — KMI-30 has none of the conventional banks that make up a quarter of the KSE-100. So Pakistan's banking-sector cycle affects KSE-100 heavily but KMI-30 barely.

Historical performance comparison

Over long periods (5+ years), the two indices tend to compound at similar rates — roughly 15-20% CAGR in PKR terms. But their year-to-year performance can diverge meaningfully:

• When banks lead (rising rates, digital transformation, credit growth): KSE-100 outperforms
• When cement + fertilizer lead (infrastructure spending, agricultural strength): KMI-30 outperforms
• During banking crises or regulatory shocks: KMI-30 significantly outperforms because it's insulated

Interestingly, over some 3-5 year windows, KMI-30 has actually outperformed KSE-100 despite tracking fewer stocks. The Shariah screens act as an unintentional quality filter — companies with high leverage tend to underperform in most market environments.

Which one should you track

Track KSE-100 if:

• You're a conventional investor without Shariah restrictions
• You want the broadest single view of PSX momentum
• You're comparing to macro reports, most of which use KSE-100
• Your broker's default charts and indices are KSE-100
• You're benchmarking against Pakistani mutual funds (most benchmark against KSE-100)

Track KMI-30 if:

• You invest with Shariah-compliant restrictions
• You want a view of Pakistan's non-financial economy
• You want to compare against Islamic mutual funds
• You want to avoid banking-sector concentration in your market read
• You'd rather track fewer, more focused constituents

Track BOTH if:

• You want to see when banking is leading vs lagging (compare relative performance)
• You manage a mixed portfolio with both conventional and Shariah holdings
• You want to identify sector rotation early (relative performance divergence often precedes rotation)

Practical PSX index tracking

Most brokerage apps show KSE-100 by default. To also track KMI-30:

• PSX Data Portal (dps.psx.com.pk) has both indices with historical data
• Investing.com tracks both under Pakistan
• TradingView has KMI-30 (search "KMI") — can chart it alongside KSE-100
• Most brokerage platforms have KMI-30 available in an "other indices" section

The bigger point about indices

An index isn't just a scoreboard — it's a lens through which you interpret market moves. A day when the KSE-100 is up 2% but KMI-30 is flat means banks moved and nothing else did. That kind of divergence is a signal about what's actually happening beneath the headline.

Experienced PSX traders watch both and interpret divergences:

• KSE-100 up, KMI-30 down: banking-only rally, not broad-based, likely fades
• KMI-30 up, KSE-100 flat: real-economy strength that KSE-100's banking exposure is dragging down
• Both up together: real broad-based bullish momentum

For portfolio construction

If you're building a diversified portfolio and want it to roughly track "Pakistan equity market beta," you have three options:

1. Buy KSE-100 constituents proportionally — labor-intensive, best done through an ETF like MZNPETF or NBP KSE-100 ETF
2. Buy KMI-30 constituents proportionally — smaller universe, easier to replicate manually
3. Buy a broad-market ETF — cleanest, but Pakistan's ETF market is still small

For most retail investors, buying 15-20 well-chosen individual stocks from either index gives you 80% of the diversification of the full index without the ETF fees.

Bottom line

Both indices are legitimate market benchmarks with different lenses. KSE-100 = "total PSX" (with bank dominance). KMI-30 = "non-financial PSX" (Shariah-compliant, more sector diverse). Serious investors track both; casual investors track whichever matches their portfolio's compliance requirements.

Use the PSX Invest platform to build watchlists from either universe and let the AI analysis surface opportunities across the index you care about most.

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Index compositions change with each semi-annual review. Verify current constituents on the PSX Data Portal before committing capital.