The investors’ confidence surged as the Pakistan Stock Exchange (PSX) gained 10,000 points after a ceasefire was announced between Pakistan and India.
The Pakistan Stock Exchange (PSX) opened the week with a historic rally on Monday, as easing geopolitical tensions and renewed economic confidence sent investors into a buying frenzy. The benchmark KSE-100 index soared over 9%, climbing 9,928 points during intra-day trading to reach 117,104.11 — marking the largest single-day point gain in PSX history. This sharp rise came after Friday’s closing level of 107,174.63.
The rally was fueled by two major catalysts: the announcement of a ceasefire between Pakistan and India, and the International Monetary Fund’s (IMF) approval of a critical loan disbursement over the weekend.
Investor sentiment surged as the ceasefire agreement significantly reduced regional geopolitical risk, while the IMF’s backing provided a much-needed boost to Pakistan’s external financing outlook. As trading volumes surged and prices spiked, the exchange triggered a one-hour trading halt — a circuit breaker designed to manage excessive volatility. Trading has since resumed.
In a market commentary, brokerage Arif Habib Limited highlighted the ceasefire as the primary driver of investor optimism, calling it a “major diplomatic breakthrough” that reduced uncertainty across regional markets.
The ceasefire follows weeks of heightened tensions, particularly after the Pahalgam attack, which had sparked aggressive sell-offs and rattled investor confidence. The situation was further stabilised by U.S. President Donald Trump’s recent statement expressing support for peace in the region and advocating for enhanced trade ties between India and Pakistan.
“Pakistan’s exports to the U.S. have reached $4 billion in FY25 to date, compared to imports of $1.5 billion — delivering a $2.5 billion trade surplus,” Arif Habib Limited noted, underscoring the country’s strengthening trade position with its largest export destination.
Adding to the bullish sentiment, the IMF approved two key funding tranches: a $1 billion disbursement under the Extended Fund Facility (EFF) and a $1.4 billion allocation from the Resilience and Sustainability Facility (RSF). The dual approvals not only inject immediate liquidity but also signal global endorsement of Pakistan’s ongoing economic reforms.
These developments come on the heels of the State Bank of Pakistan’s decision to cut the policy rate by 100 basis points to 11%, citing easing inflationary pressures. The rate cut is expected to support equity valuations, particularly in interest-sensitive sectors such as cement, automobiles, and construction.
Combined, the ceasefire, IMF financing, supportive monetary policy, and improving trade dynamics with the U.S. have created a potent mix of market-positive forces, helping the PSX recover from a sharp downtrend.
Since April 22, when tensions escalated following the Pahalgam incident, the KSE-100 had fallen by 12.6% as of May 8. However, a 3.5% rebound on May 9 hinted at a shift in market mood — a shift that has now erupted into a full-blown rally.
