In an extraordinary turn of events, the Pakistan Stock Exchange (PSX) witnessed one of its sharpest single-day rallies on Monday, with the benchmark KSE-100 Index surging by nearly 10,000 points during the opening hours of trading.
This dramatic upswing was fueled by a convergence of positive developments, notably a landmark ceasefire agreement between India and Pakistan and the International Monetary Fund’s (IMF) approval of fresh funding packages.
At 9:30am, the KSE-100 Index stood at 117,104.11 — up by 9,929.48 points or 9.26% — prompting a temporary halt in market operations due to the overwhelming upward momentum.
This historic rise marks the index’s strongest performance in recent years, as investors responded with optimism to regional de-escalation and financial assurances from global institutions.
Market sentiment reverses sharply
Investor confidence, which had been battered in recent weeks due to heightened cross-border tensions following the April 22 Pahalgam attack, rebounded sharply. The announcement of a ceasefire between India and Pakistan — hailed as a major diplomatic achievement — helped quell fears of prolonged instability in the region.
The positive momentum was further reinforced by the IMF’s weekend approval of a $1 billion disbursement under its Extended Fund Facility (EFF), along with an additional $1.4 billion under the Resilience and Sustainability Facility (RSF). These inflows are expected to bolster Pakistan’s foreign exchange reserves and provide fiscal space to manage its balance of payments more effectively.
Adding to the bullish mood was a recent statement from the US President, who expressed strong support for resolving the Kashmir dispute and called for enhanced economic cooperation between India and Pakistan. The remarks were seen as a signal of Washington’s renewed engagement in South Asian peace efforts.
Analysts eye further gains
According to brokerage reports issued early Monday, investor sentiment has shifted dramatically from fear to opportunity. With geopolitical risks easing and macroeconomic conditions showing signs of improvement, many stocks were expected to hit their upper circuits of 10%, indicating overwhelming demand.
The PSX had suffered a 12.6% decline since April 22 amid escalating tensions, with the benchmark shedding 6,939 points last week alone. However, Monday’s rebound has wiped out a significant portion of those losses and renewed optimism about the index's medium-term outlook.
Global markets also rally
The rally at the PSX coincided with positive trends in global markets. Wall Street futures rose amid signs of progress in US-China trade talks, while European and Asian indices also posted moderate gains. Investors worldwide seemed encouraged by signs that the worst of global geopolitical and economic tensions may be easing.
S&P 500 and Nasdaq futures rose by 1.2% and 1.4%, respectively, while key European benchmarks such as EUROSTOXX 50, DAX, and FTSE futures advanced between 0.4% and 0.9%. Asian markets also edged higher, with Japan’s Nikkei up 0.3% and South Korea’s benchmark gaining 0.4%.
Outlook: Recovery in sight?
The PSX’s performance on Monday is being seen as a potential turning point for Pakistan’s financial markets. While challenges remain — including inflationary pressures and structural economic issues — the latest developments have provided a much-needed respite.
With renewed diplomatic momentum and financial backing from the IMF, investors are now cautiously optimistic about Pakistan’s near-term economic prospects. The coming days will be closely watched to determine whether the rally sustains and translates into a broader recovery.
