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Glossary · PSX term

Index rebalancing.

Rebalancing is the periodic review where an index adds, drops, or re-weights its member companies.

Definition

The PSX reviews indices like the KSE-100 on a set schedule, replacing companies that no longer qualify and updating free-float weights. Rebalancing can trigger buying or selling by index-tracking funds as they adjust to the new composition.

Worked example

If a company's free float shrinks below the threshold at a recomposition, it may be dropped from the KSE-100 and replaced by a larger eligible name.

Related on PSX Clarity

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Income statement

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Intrinsic value

Intrinsic value is an estimate of what a company is truly worth based on its fundamentals.