The Pakistan Stock Exchange (PSX) opened to a sharp rally on Monday after tensions between Pakistan and India eased, with the benchmark KSE-100 index jumping more than 9 percent.
The benchmark KSE-100 index surged to 117,204.17 points after a surge of 10029.54 points or 9.36 percent during intra-day trade — the highest day-on-day increase in points on an intra-day basis — up from the previous close of 107,174.63 points, Geo News reported.
The positive momentum was driven by two major developments: the ceasefire agreement between Pakistan and India, and the International Monetary Fund's (IMF) approval of a critical loan tranche over the weekend.
Market participants responded with strong buying activity amid improved geopolitical and economic outlooks. Following the rapid surge, trading on the exchange was suspended — a circuit breaker to control excessive volatility — moments after the market opened. However, it resumed after an hour.
Amid easing regional tensions, Pakistan has secured a crucial financial lifeline with the IMF’s approval of a $1bn disbursement under the Extended Fund Facility (EFF) and a $1.4bn Resilience and Sustainability Facility (RSF).
The IMF’s dual approval not only ensures immediate external financing support but also signals international endorsement of Pakistan’s reform agenda, further strengthening investor confidence amid improving macroeconomic stability.
These developments coincide with the State Bank of Pakistan's recent decision to cut the policy rate by 100bps to 11 percent — a move that reflects easing inflationary pressure and is expected to boost equity valuations, particularly in leveraged and cyclical sectors.
Together, the ceasefire, IMF support, monetary easing, and the positive shift in trade relations with the US form a powerful trifecta of bullish triggers just as the market attempts to recover from its recent sharp correction that began on April 22, following the Pahalgam attack and subsequent regional tensions.
Since April 22 the KSE-100 index had declined by 12.6 percent with panic-driven selloffs culminating in the largest ever intraday point drop in market history last week, although a sharp 3.5 percent rebound on May 9 hinted at a sentiment shift already underway.
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