The Pakistan Stock Exchange (PSX) had its best day in over two decades on Monday, jumping more than 9% in a single session — the biggest one-day gain in 26 years. The surge came as investor sentiment rebounded sharply due to easing tensions with India, a green light from the IMF on key financial packages, and signs of improving trade ties with the United States.
The KSE-100 Index skyrocketed by 10,123 points, or 9.45%, to close at 117,297.73, briefly hitting an intraday high of 117,327.78. The rally was so strong that trading had to be paused within the first five minutes after the KSE-30 index shot up more than 5%, triggering a market-wide circuit breaker for an hour.
Top brokerage houses attributed the historic rally to three key factors: a U.S.-brokered ceasefire between Pakistan and India, approval of a $1 billion IMF loan and an additional $1.4 billion under its climate-focused Resilience and Sustainability Facility, and the State Bank of Pakistan’s recent move to cut interest rates by 100 basis points.
According to Topline Securities, the ceasefire and anticipated IMF disbursements ignited a buying frenzy, especially among local investors and mutual funds who had been sitting on the sidelines or selling in recent weeks. Major players like Fauji Fertilizer, United Bank, Engro, Mari Petroleum, and Lucky Cement led the gains, together adding 3,003 points to the index.
Arif Habib Limited noted that the market’s confidence was further boosted by a diplomatic breakthrough with India and support from U.S. President Donald Trump, who pledged to increase trade with both nations and support dialogue over the Kashmir issue.
On the economic front, Pakistan’s trade with the U.S. remains strong, with exports totaling $4 billion so far in FY25 compared to $1.5 billion in imports — a healthy surplus of $2.5 billion.
Investor optimism also stems from signs of improving macroeconomic stability, supported by the IMF’s endorsement of Pakistan’s reform agenda and monetary easing aimed at spurring growth. The central bank’s rate cut is expected to boost stock valuations, particularly in sectors that benefit from lower borrowing costs.
The rally marks a dramatic turnaround for the market, which had been in a downward spiral since April 22 due to heightened tensions following a deadly attack in Indian-administered Kashmir. At its lowest point, the index had dropped 12.6% by May 8, culminating in the largest-ever intraday point loss. A modest recovery began on May 9, but Monday’s surge signals a full-blown return of investor confidence.
