PSX KSE-100 Soars Nearly 10,000 Points on India-Pakistan Ceasefire and IMF Funding Boost

The Pakistan Stock Exchange (PSX) experienced an unprecedented rally on Monday, with the benchmark KSE-100 Index soaring by 9,929.48 points, or 9.26%, to reach 117,104.11 by 9:30 AM. This marked the largest single-day gain in the index’s history, prompting a temporary suspension of trading due to circuit breakers triggered by extreme volatility. The surge was driven by a confluence of positive developments, including a landmark ceasefire agreement between India and Pakistan and the International Monetary Fund’s (IMF) approval of $2.4 billion in fresh funding.

The rally followed weeks of market turmoil sparked by escalating tensions between India and Pakistan after the April 22, 2025, Pahalgam terror attack, which killed 26 civilians. The KSE-100 had shed 12.6% since then, including a 6,939-point decline last week alone, as investor confidence plummeted amid fears of prolonged conflict. However, the ceasefire agreement, announced on Saturday and reinforced by a call between the Directors General of Military Operations (DGMOs) of both nations, significantly eased geopolitical risks. Indian Foreign Secretary Vikram Misri confirmed the ceasefire took effect at 5:00 PM IST on May 10, although minor violations were reported later that evening.

Adding to the bullish sentiment, the IMF approved a $1 billion tranche under its Extended Fund Facility (EFF) and an additional $1.4 billion under the Resilience and Sustainability Facility (RSF) over the weekend. These funds are expected to bolster Pakistan’s foreign exchange reserves, which stood at $6.2 billion as of March 31, 2025, and provide critical fiscal space to manage the country’s $130 billion external debt. The IMF’s endorsement of Pakistan’s reform agenda further boosted investor confidence, signaling international support for the nation’s economic stabilization efforts.

Market analysts attributed the rally to a sharp reversal in investor sentiment. “The ceasefire and IMF funding have flipped the market from fear to opportunity,” said Mohammed Sohail, CEO of Topline Securities. Arif Habib Limited (AHL) predicted a 6–7% gain, with many stocks hitting their 10% upper circuit, reflecting overwhelming demand. Posts on X echoed this optimism, with one user noting, “Pakistan Stock Exchange rises an unprecedented 8.12% in the first hour of trading,” highlighting the market’s robust response.

The rally was not isolated to Pakistan. Global markets also posted gains, with Wall Street futures climbing 1.2–1.4% amid progress in US-China trade talks, and European indices like EUROSTOXX 50 and DAX advancing 0.4–0.9%. In Asia, Japan’s Nikkei and South Korea’s benchmark rose 0.3% and 0.4%, respectively, reflecting a broader easing of geopolitical and economic tensions. India’s Nifty 50 and BSE Sensex also surged over 2.5%, recovering losses from the conflict period.

Despite the optimism, challenges remain. Pakistan’s economy faces inflationary pressures, a fragile rupee, and looming debt repayments, with $30 billion due in 2025 and nearly $100 billion by 2027. The ceasefire’s fragility was underscored by reported violations on May 10, raising concerns about sustainability. However, Monday’s rally has restored the KSE-100 to positive territory for 2025, erasing much of the year’s earlier losses.

Looking ahead, analysts are cautiously optimistic. “The confluence of the ceasefire, IMF support, and monetary easing by the State Bank of Pakistan’s recent 100-basis-point rate cut to 11% sets the stage for a potential recovery,” AHL noted. Investors will closely monitor the DGMOs’ scheduled talks on May 12 and the IMF’s ongoing review of Pakistan’s $7 billion bailout program to gauge the rally’s staying power. For now, the PSX’s historic surge signals renewed hope for Pakistan’s financial markets and its broader economic prospects.