The Pakistan Stock Exchange (PSX) witnessed an unprecedented surge on Monday, with the benchmark KSE-100 index jumping over 9%, following the announcement of a ceasefire between Pakistan and India that eased geopolitical tensions and boosted investor confidence.
The KSE-100 opened the day with a dramatic gain of 9,929 points, or 9.26%, reaching 117,104 points by 9:30 AM. The sharp spike triggered a temporary halt in trading to stabilize the market. By mid-afternoon, the index peaked at 117,327 points—marking a record-breaking intraday gain of over 10,000 points, far surpassing the 4,700-point surge in November 2024.
By market close, the index settled at 117,297 points, up 10,123 points or 9.45%—its biggest single-day percentage increase in history.
Market analysts attributed the bullish sentiment to several factors. “The market reacted positively to the ceasefire, viewing it as a sign of regional stability,” said Yousuf M. Farooq, Research Director at Chase Securities. He noted that the Pakistan Air Force’s effective deterrence against Indian aggression had restored investor confidence.
Farooq also highlighted recent economic developments such as the State Bank’s interest rate cut and the IMF’s approval of a $1 billion tranche, both of which further fueled market optimism.
Samiullah Tariq, Head of Research at Pak Kuwait Investment Company, echoed this view, citing three primary drivers behind the rally: the ceasefire, the IMF disbursement, and U.S. President Donald Trump’s pledge to enhance trade with Pakistan. Trump, who played a key role in brokering the ceasefire, also offered support in resolving the Kashmir dispute and announced plans to increase trade with both Pakistan and India.
In addition to equities, Pakistan’s international bonds also posted strong gains, rising by as much as 5.7 cents on the dollar, according to Tradeweb.
The turnaround in market sentiment comes just days after a sharp downturn. On May 8, as cross-border tensions escalated and Pakistan shot down 25 Indian drones, the KSE-100 index suffered its largest single-day drop of nearly 6,500 points.
Prominent businessman Arif Habib commented from the PSX, saying, “We’ve already achieved macroeconomic stability, making Pakistan’s economic outlook more appealing.” He emphasized the importance of using this period of calm to resolve political issues within parliament to avoid further disruptions to progress.
Awais Ashraf, Director of Research at AKD Securities, highlighted Pakistan’s strengthened geopolitical standing as a result of the conflict. “The brief confrontation demonstrated our technological and military advantage, which is likely to improve relations with Gulf states and boost exports in defence and technology sectors,” he said.
Ashraf added that investor focus is expected to now shift towards improving macroeconomic fundamentals, including record-low inflation and a historic current account surplus. April’s consumer inflation rate dropped to 0.3% year-on-year, while the current account posted a record surplus of $1.195 billion in March.
Indian Markets Rebound Strongly
India’s stock markets also responded positively to the ceasefire. Both the Nifty 50 and BSE Sensex rose by over 3%, poised for their best day in nearly a year. As of early afternoon trading, the Nifty stood at 24,787.8 and the Sensex at 81,958.04, recovering previous losses from the recent skirmishes.
Barclays, in a market note, maintained its economic outlook for India, forecasting a 6.5% year-on-year GDP growth in FY25–26, citing continued domestic resilience and progress in trade negotiations with the U.S.
All major Indian sectors traded in the green, with small- and mid-cap indices gaining 4% and 3.6%, respectively.
