KARACHI: The equity market posted strong gains on Tuesday, driven by optimism over a potential easing of tensions in the Middle East and reports suggesting Pakistan could play a mediating role between the United States and Iran.
The benchmark KSE-100 Index at the Pakistan Stock Exchange traded in a wide range, reaching a high of 157,442.68, up 4,702.31 points (3.07%), and a low of 155,608.37, still 1,977.67 points (1.29%) above the previous close of 152,740.37.
Market participants attributed the rally to improving geopolitical sentiment. Huzaifa Riaz, Director at Mayari Securities, said the market opened on a positive note due to expectations of reduced tensions and Pakistan’s growing geopolitical relevance amid reports of possible diplomatic engagement between Washington and Tehran.
Adding to the positive sentiment, Donald Trump stated that he had ordered a five-day delay in potential military action against Iranian power plants, citing “productive discussions” aimed at resolving hostilities in the region.
However, Iran appeared to dismiss such developments. The Fars News Agency reported that there had been no direct or indirect communication with the United States. Meanwhile, Deputy Speaker Ali Nikzad reiterated that no talks were planned and that the Strait of Hormuz would remain effectively closed.
Global markets reacted cautiously. Asian equities initially gained on hopes of de-escalation, with major markets including Tokyo, Hong Kong, and Shanghai trading higher, though gains moderated later in the session. Oil prices also edged up after an earlier decline, reflecting ongoing uncertainty.
Analysts believe the direction of the market will remain closely linked to developments in the Middle East. Investors are also keeping an eye on post-Ramadan market activity and upcoming inflation data.
Research firms noted that valuations have become increasingly attractive. According to AKD Research, any easing in geopolitical tensions could trigger a stronger market rebound, with forward price-to-earnings ratios around 6.6 times. Meanwhile, Arif Habib Limited estimated the market’s price-to-earnings ratio at 7.5 times, with a dividend yield of approximately 6.8%.
