The Pakistan Stock Exchange (PSX) witnessed a historic rally on Monday, with the benchmark KSE-100 index surging over 9% following a significant reduction in geopolitical tensions and a major financial boost from the International Monetary Fund (IMF).
The KSE-100 index skyrocketed by 9,928 points during intra-day trading, reaching a new high of 117,104.11 points — marking the largest single-day point gain in the exchange’s history. This surge came after the previous close at 107,174.63 points.
The rally was fueled by two major catalysts: a ceasefire agreement between Pakistan and India, which eased weeks of escalating tensions, and the IMF’s weekend approval of critical loan disbursements.
Investor sentiment turned sharply positive, triggering aggressive buying activity. As a result of the extreme market movement, a temporary suspension — known as a circuit breaker — was triggered for one hour to manage volatility. Trading later resumed.
Brokerage firm Arif Habib Limited highlighted the ceasefire as a pivotal factor, calling it “a major diplomatic breakthrough” that substantially reduced regional geopolitical risks and restored market confidence.
The rally followed intense selloffs sparked by the recent Pahalgam attack, which had led to heightened investor anxiety and a 12.6% drop in the KSE-100 index since April 22.
The geopolitical de-escalation was further reinforced by a statement from U.S. President Donald Trump, who expressed support for peaceful resolution of the Kashmir issue and called for increased trade between India and Pakistan.
Pakistan’s improving trade dynamics were also noted. Exports to the U.S. reached $4 billion in FY25 to date, against imports of $1.5 billion — resulting in a healthy trade surplus of $2.5 billion, according to the brokerage.
Adding to the positive momentum, Pakistan secured $2.4 billion in combined support from the IMF — $1 billion under the Extended Fund Facility (EFF) and $1.4 billion under the Resilience and Sustainability Facility (RSF). This approval not only addresses short-term funding needs but also signals confidence in Pakistan’s reform agenda.
In a further boost to economic sentiment, the State Bank of Pakistan recently reduced its policy rate by 100 basis points, bringing it down to 11%. The rate cut reflects easing inflationary pressures and is expected to benefit interest rate-sensitive sectors, particularly those reliant on leverage and cyclical growth.
With regional tensions cooling, IMF-backed financial support in place, improved U.S. trade relations, and a more accommodative monetary policy, the PSX appears well-positioned for a sustained recovery following the recent period of heightened uncertainty.
