PSX sees historic surge of 10,000 points as tension lessens after ceasefire
Business
The bullish trend is being attributed to ceasefire agreement and IMF approvals
KARACHI (Dunya News) – The Pakistan Stock Exchange (PSX) on Monday witnessed a historic surge following a ceasefire agreement between Pakistan and India, and an approval granted by the International Monetary Fund (IMF) for release of a loan tranche.
During the opening session on the first day of the week, the stock market initially climbed to 117,104.11 points - a gain of staggering 9,928 points - as investors seemed confident following the positive developments on political and economic fronts.
Later, the KSE-100 index traded at 9,475.49 points to hit 116,650.12 points with a positive change of 8.84 percent, forcing the suspension of the market for one hour.
Resumption of trading further improved the situation and the index eventually closed at 117,297 after spike of 10,123 points.
Experts have attributed the historic surge to a powerful convergence of positive developments, with the most significant catalyst being the ceasefire agreement between India and Pakistan.
Also Read: Pakistan thanks UN chief for welcoming Pak-India ceasefire
The announcement of the ceasefire came after weeks of tension following the Pahalgam attack, which had triggered aggressive selloffs and fueled widespread investor concerns.
Furthermore, Pakistan has secured a crucial financial lifeline with the IMF’s approval of a $1 billion disbursement under the Extended Fund Facility (EFF) and a $1.4 billion Resilience and Sustainability Facility (RSF).
These developments coincided with the State Bank of Pakistan’s (SBP) recent decision to reduce the policy rate by 100bps to 11pc.
On May 9, the Executive Board of the International Monetary Fund (IMF) formally approved a $1 billion disbursement for Pakistan under the Extended Fund Facility (EFF), marking a significant step in the country’s ongoing economic stabilisation efforts.
The tranche was greenlit following Pakistan’s successful completion of key performance benchmarks. The EFF program, which is designed to support countries facing balance-of-payment difficulties, spans a 37-month period.
Additionally, Pakistan is also a participant in the Resilience and Sustainability Facility (RSF), which is aimed at enhancing climate resilience and spans 28 months. However, the current disbursement only pertains to the EFF.
Also Read: IMF approves $1b loan tranche for Pakistan amid economic reforms
This immediate release of funds is expected to provide crucial support to Pakistan's foreign exchange reserves, ease fiscal pressure, and help maintain economic momentum amid ongoing global financial uncertainty.
The IMF’s decision came after Pakistan fulfilled major structural benchmarks, including improvements in the tax-to-GDP ratio, maintaining a primary fiscal surplus, and achieving provincial fiscal targets.
WEEK-LONG VOLATILITY
A day after terrible shedding triggered by geopolitical aggravation, the Pakistan Stock Exchange (PSX) stood from the ground up on Friday last.
The benchmark KSE-100 Index was hovering at 105,759 after gaining more than 2,200 points during the opening hours of trade. Later, things further improved and the index closed at 107,174 after attaining 3,647 points.
Across-the-board buying was observed in key sectors, including automobile assemblers, cement, commercial banks, oil and gas exploration companies, OMCs, and power generation.
Besides, index-heavy stocks, including HUBCO, MARI, OGDC, PPL, POL, PSO, and SNGPL, also traded in the green as bulls returned to the PSX.
Experts linked the latest bullish spree with meeting of the Executive Board of the International Monetary Fund (IMF).
In the preceding week, the PSX grappled with downward trend amid war clouds. Thursday's trading started off on an encouraging note as the index rose to 111,881 after gaining 1,800 points. However, the euphoria proved short-lived.
The KSE-100 index plummeted by 7,516 points to 102,492 at one point, prompting the managers to stop the activities.
The situation could not much improve and the KSE-100 index eventually closed at 103,526 after losing 6,482 points. In all, the PSX lost more than 12,000 points in the last two days (Wednesday and Thursday).
