The Pakistan Stock Exchange (PSX) experienced a strong rally on Monday, gaining 9.26 percent during intraday trade following a recent ceasefire between Pakistan and India. The KSE-100 index opened strong, rising by 9,929.48 points to reach 117,104.11 points from the previous close of 107,174.63 at 9:30 am. Due to the significant gains, trading was temporarily halted for an hour to manage excessive volatility.
Later in the day, the benchmark index surged as much as 117,327.78 points, an increase of 10,153.15 points (9.47 percent) from its previous close at 3:15 pm. Ultimately, the KSE-100 concluded the day at 117,297.73 points, marking an overall gain of 10,123.10 points (9.45 percent). Yousuf M.
Farooq, research director at Chase Securities, attributed the market’s positive reaction to the ceasefire announcement, asserting that the market had responded positively to Pakistan’s actions. Farooq also noted that recent developments, such as the International Monetary Fund’s (IMF) approval for disbursements, had further fueled investor enthusiasm. Samiullah Tariq, head of research at Pak Kuwait Investment Company Ltd, identified three main drivers of the robust market activity: the ceasefire, the IMF’s approval, and US President Donald Trump’s announcement to increase trade with Pakistan and India.
Trump not only offered his assistance in resolving the Kashmir dispute but also committed to significantly boosting trade with both countries. The ceasefire and subsequent investor confidence also positively impacted Pakistan’s international bonds, which recorded gains of up to 5.7 cents on the dollar, according to Tradeweb data.
Stock market rallies amid ceasefire
Arif Habib, a prominent industrialist, emphasized Pakistan’s macroeconomic stability, noting that the interest rate cut and the IMF’s approval had contributed to the positive market movements. Habib expressed optimism about political resolutions, stating that settling ongoing political matters in parliament would remove obstacles to Pakistan’s progress. Awais Ashraf, director of research at AKD Securities, highlighted the potential for improved relations with Gulf countries due to Pakistan’s strengthened geopolitical position.
The conflict’s resolution had underscored Pakistan’s military and technological capabilities, likely enhancing defense and technology export growth. In conjunction with these macroeconomic developments, Pakistan reported a consumer inflation rate plunge to an all-time low of 0.3 percent year-on-year, and a record-high current account surplus of $1.195 billion for the month. Meanwhile, Indian stocks also surged, with benchmarks Nifty 50 and BSE Sensex gaining around 3.25 percent each to reach 24,787.8 and 81,958.04, respectively, by 1:12 pm IST.
If gains hold, this will mark their best single-day jump since June 2024, when markets had rallied post the National Democratic Alliance’s election victory. Barclays, in a note, predicted that India’s economy would grow at a solid 6.5 percent year-on-year in FY25-26, driven by its relative insulation from global trade uncertainties and progress in trade talks with the US. All 13 major sectors in the Indian market reported gains, with small- and mid-cap stocks rallying 4 percent and 3.6 percent, respectively.
The market’s response to the regional ceasefire has been overwhelmingly positive, driving unprecedented gains in stock indices across both Pakistan and India. Investors now look towards future economic policies and international relations as determinants of sustained growth in the coming months.
