The KSE-100 is a total-return index, based to 1,000 points in November 1991 — dividends, bonus and rights are adjusted back into the number, not paid out and forgotten. Its 100 constituents are picked by taking the largest free-float stock in each of 36 sectors, then filling the remaining 64 slots with the next-largest free-float names regardless of sector. Neither of those two facts is the “35 sectors + 65 by market cap” version that circulates informally, and PSX’s own published methodology does not specify a cap on any single constituent’s weight.
Total return, not price return — and a second index most people don’t know exists
PSX runs two versions of the same 100-stock basket. The one quoted everywhere as “the KSE-100” is the total-return series, based to 1,000 points in November 1991, with cash dividends, bonus and rights issues adjusted back into the index level as they occur. A separate variant, KSE100PR, strips that out and tracks price only, based to 6,931 points on 1 April 2009.
| Series | What it tracks | Base date | Base value |
|---|---|---|---|
| KSE-100 | Total return — dividends, bonus, rights adjusted in | November 1991 | 1,000 |
| KSE100PR | Price return only | 1 April 2009 | 6,931 |
The distinction matters for anyone comparing the index’s long-run return to a dividend-paying stock’s total return, or to another market’s price-only benchmark — the KSE-100 headline number already has payouts baked in, most price indices elsewhere don’t.
How a constituent gets in: 36 sector leaders, then 64 more
The 100 slots are not filled by ranking every listed company on market cap and taking the top 100. The methodology splits the selection in two:
- Both numbers are out of date — the current split is 36 and 64.
- Selection is by free-float market cap, not total market cap.
- The largest free-float stock in each of 36 sectors (of 38 listed; ETFs and open-end mutual funds excluded).
- The remaining 64 places filled by free-float market cap, descending, regardless of sector.
- A new listing qualifies after one re-composition period if its free float is at least 2% of total free-float market cap.
Free float itself excludes government holdings, director/sponsor/senior-management and associate holdings, shares still in physical form, cross-holdings, non-sellable ESOS shares and treasury shares — and can never exceed a scrip’s book-entry shares actually sitting in the CDS. The free-float weighting was recommended by the Index Expert Committee in early 2012, approved by the PSX Board that April, run in parallel from June 2012, and went fully live on 15 October 2012, replacing the prior total-market-cap weighting.
A constituent doesn’t get bumped the moment it’s overtaken
Out-ranking an incumbent isn’t enough on its own — the brochure builds in buffers against reshuffling the index every time two stocks’ market caps cross:
- Sector rule — a challenger must hold the largest-in-sector position for two consecutive semi-annual re-composition periods, or exceed the incumbent by 10% or more of free-float value, whichever comes first.
- Capitalisation rule — for the 64 non-sector slots, a challenger must exceed the lowest cap-selected member for two consecutive periods, at which point it “automatically pushes out the lowest cap selected stock.”
- Special re-composition — an off-cycle override for delisting, mergers or a scheme of arrangement, independent of the regular schedule.
The regular schedule itself runs twice a year, each leg on the same three-step cadence:
Stocks in the Defaulters’ Counter, suspended, or declared Non-Tradable in the preceding six months are excluded from selection outright, on either leg.
No published weight cap — stated carefully, on purpose
Some other indices — MSCI-style methodologies, or PSX’s own KMI-30 — cap how much of the index a single constituent can weigh. The KSE-100 brochure has no equivalent section. The only percentage figures in the entire document are the 2% free-float threshold for a new listing and the 10% sector-rule margin above — neither is a cap on constituent weight.
That is a statement about the published document, not a claim about what actually happens in practice: PSX’s published methodology does not specify a cap on any single constituent’s weight. Whether that produces meaningful concentration in practice is a separate, checkable question the brochure itself doesn’t answer — it just isn’t there to answer it.
Where this connects
The index’s total-return adjustment for dividends, bonus and rights runs on the same ex-entitlement mechanics the desk has already covered for individual stocks — see book closure and the ex-date for how PSX times that cutoff post-T+1. None of the desk’s own signals target the index itself; research and position sizing run stock by stock, long only, across whatever subset of the 100 (or the wider board) a setup names.
Checking this yourself
- KSE100 Index (Total Return & Price Return) — Index Brochure — PSX, updated June 2025. Source for every figure above: base values, free-float definition, the 36+64 selection split, the sector and capitalisation re-composition rules, and the absence of a weight-cap section.
⚠️ This brochure’s ex-price timing language is stale post-T+1 (it still quotes the superseded two-settlement-day rule) — see book closure and the ex-date for the current rule. Its index-construction mechanics above are unaffected by that change.
Research, not advice. This explains how PSX constructs and rebalances the KSE-100; it is not a recommendation to trade the index or any constituent. Methodology is dated — check PSX’s current published brochure before relying on a detail here for anything time-sensitive.