ISLAMABAD: The Pakistan Stock Exchange (PSX) opened Monday with a powerful rally as easing tensions with India and fresh support from the International Monetary Fund (IMF) sparked a wave of investor optimism. The benchmark KSE-100 index surged by more than 9% in intra-day trading, prompting a temporary suspension of trading due to market volatility controls.
The KSE-100 climbed by an unprecedented 9,928 points, reaching 117,104.11 — up from the previous close of 107,174.63 — marking the largest single-day points gain in PSX history.
This rally was fueled primarily by two key developments: a ceasefire agreement between Pakistan and India, which significantly reduced regional geopolitical risk, and the IMF’s approval of critical financial support over the weekend. The IMF cleared a $1 billion disbursement under the Extended Fund Facility (EFF), along with $1.4 billion under the Resilience and Sustainability Facility (RSF), providing a much-needed external financing boost.
Investor sentiment was further buoyed by improving macroeconomic signals. Arif Habib Limited, a leading brokerage, noted that the ceasefire agreement represents a major diplomatic breakthrough after weeks of escalated tensions triggered by the Pahalgam attack. The ceasefire eased investor concerns and encouraged renewed buying interest across the board.
Adding to the optimism was U.S. President Donald Trump’s recent statement pledging support for resolving the Kashmir conflict and fostering stronger trade relations between India and Pakistan. The brokerage highlighted that Pakistan’s exports to the U.S. reached $4 billion so far in FY25, against imports of $1.5 billion, resulting in a significant $2.5 billion trade surplus.
Additionally, the State Bank of Pakistan’s recent decision to cut the policy rate by 100 basis points to 11% — reflecting easing inflation — is expected to support equity valuations, especially in interest-rate-sensitive and cyclical sectors.
Together, the de-escalation in regional tensions, IMF financial backing, dovish monetary policy, and improved trade dynamics with the U.S. form a strong foundation for market recovery. These developments arrive at a critical time, following a sharp market correction that began in late April amid heightened geopolitical risks.
