The Pakistan Stock Exchange (PSX) gained a record nine per cent on Monday during intraday trade — the restored calm in the markets mirroring that of a recent Pakistan-India ceasefire that boosted investor mood.
Saturday’s ceasefire, announced by US President Donald Trump, followed four days of tit-for-tat strikes between the nuclear-armed neighbours, as well as diplomacy and pressure from Washington.
The KSE-100 index opened with a gain of 9,929.48 points, or 9.26pc, to stand at 117,104.11 points from the previous close of 107,174.63 at 9:30am.
Due to the massive gains, the PSX was suspended for an hour after opening to control excessive volatility.
Later, the benchmark index stood at 116,857.00 points, 9,682.37 points (9.03pc) higher than yesterday’s close, at 1:30pm.
“The market has reacted jubilantly to the ceasefire announcement after Pakistan established effective deterrence against India,” noted Yousuf M. Farooq, research director at Chase Securities.
“The PSX has saluted the Pakistan Air Force this morning with a surge of over 9pc in the KSE-100 Index,” he remarked, in reference to the PAF’s actions in response to India’s strikes.
Additionally, Farooq noted that the recent interest rate cut and the approval of $1 billion tranche by the International Monetary Fund (IMF) “further fueled investor enthusiasm”.
Commenting on the future investor mood, Farooq said market participants were now expected to shift their focus towards the upcoming federal budget for the next fiscal year, which is expected on June 2.
Samiullah Tariq, head of research and development at Pak Kuwait Investment Company Ltd, listed three main reasons for the robust market activity.
Other than the ceasefire and the IMF’s green light to the disbursement, Tariq mentioned US President Donald Trump’s recent statement on increasing trade with Pakistan.
After mediating the halt of hostilities between the South Asian arch-rivals, Trump not only offered his help in resolving the Kashmir dispute but also announced he would “increase trade substantially” with both Pakistan and India.
Awais Ashraf, director of research at AKD Securities, pointed out the heightened possibility of further improving ties with Gulf countries due to Pakistan’s enhanced geopolitical position.
“This brief conflict has also demonstrated our military and technological superiority over India, strengthening our geopolitical position. As a result, it is likely to enhance ties with Gulf countries amid regional tensions and support growth in our defence and technology exports,” Ashraf told Dawn.com.
While noting the investor zest in light of the Pak-India “conflict ending with dominance”, he said the attention was now expected to shift towards improving macroeconomic indicators, including historically low inflation and a record-high current account surplus.
Pakistan’s consumer inflation rate plunged to an all-time low of 0.3pc year-on-year in April, while the $1.195bn current account surplus in March was the highest-ever monthly surplus.
Indian shares also rallied today.
More to follow
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