In a remarkable turn of events, the Pakistan Stock Exchange (PSX) experienced its most dramatic single-day rally in over two decades on Monday, as the benchmark KSE-100 index soared by more than 10,000 points.
Fueled by a rare combination of easing geopolitical tensions, renewed confidence from the International Monetary Fund (IMF), and a sharp policy rate cut, the market witnessed one of the fiercest buying sprees in its history.
The KSE-100 index surged by 10,123 points or 9.45% to settle at 117,297.73, briefly touching an intraday high of 117,327.78. Over 345 million shares exchanged hands, with total trading value clocking in at nearly Rs22 billion. This sharp rally added over Rs1 trillion in market capitalization in a single session — an achievement not seen in 26 years.
At the heart of the rally was a landmark US-brokered ceasefire agreement between Pakistan and India, signaling a major de-escalation in regional tensions. This diplomatic breakthrough came just weeks after the Pahalgam attack, which had triggered panic selling and a steep correction in the market. Investors, who had been skittish amid fears of escalation, re-entered the market with full force.
Adding to the bullish momentum was the IMF’s green light for two key financial packages — a $1 billion disbursement under the Extended Fund Facility (EFF) and a $1.4 billion injection under the Resilience and Sustainability Facility (RSF). These approvals have not only provided crucial external financing support but also signaled international trust in Pakistan’s ongoing economic reforms.
The euphoria was such that trading had to be temporarily suspended early in the day after the KSE-30 index jumped more than 5% within the first five minutes, activating a market-wide circuit breaker. Once trading resumed, buying pressure intensified further, with investors piling into stocks across all major sectors.
The market rally was led by key blue-chip companies including Fauji Fertilizer, United Bank, Engro Corporation, Mari Petroleum, and Lucky Cement, which together contributed over 3,000 points to the index’s gain. According to analysts at Topline Securities, local retail investors, who had been net sellers in recent weeks, were aggressive buyers during the session — both directly and through mutual funds.
The broader optimism also stemmed from U.S. President Donald Trump's recent remarks pledging support for resolving the Kashmir issue and encouraging stronger trade ties between Pakistan and India. These comments further strengthened investor sentiment, already buoyed by news that Pakistan’s exports to the U.S. have reached $4 billion so far in FY25, compared to just $1.5 billion in imports — delivering a healthy trade surplus of $2.5 billion.
In another major development, the State Bank of Pakistan reduced the policy rate by 100 basis points, bringing it down to 11%. This move reflects easing inflation and is expected to benefit interest-sensitive sectors, particularly banking, cement, and construction.
Traders at the PSX celebrated the historic rally by cutting cakes inside the trading hall, marking not just a market milestone but also Pakistan’s recent diplomatic and economic successes. Market participants described the rally as a collective sigh of relief after weeks of turbulence and uncertainty.
Just last week, the KSE-100 had suffered its largest-ever intraday point drop following the Pahalgam attack and rising regional tensions. But Monday’s powerful comeback wiped out much of those losses and injected a wave of optimism across the financial landscape.
With the ceasefire holding, IMF funds flowing in, the central bank turning dovish, and international trade dynamics improving, analysts believe Pakistan’s stock market is now well-positioned for sustained recovery and long-term growth.
