PSX Skyrockets 9,475 Points as Ceasefire and IMF Boost Investor Confidence

The Pakistan Stock Exchange (PSX) witnessed a historic surge on May 12, 2025, as the KSE-100 Index soared by 9,475 points (8.84%) to close at 116,650.12, triggering a market-wide trading halt due to the index-based halt mechanism. This monumental rally is the outcome of an extraordinary confluence of geopolitical, financial, and global economic developments that have restored investor confidence and revitalized Pakistan’s capital market.

Key Drivers of the Rally

1. Ceasefire Between Pakistan and India
The most immediate and impactful catalyst was the formalization of a ceasefire between Pakistan and India. The Directors General of Military Operations (DGMOs) of both nations met on May 12 to solidify the terms of the previously agreed ceasefire. This diplomatic milestone dramatically reduced regional security concerns and sparked renewed optimism among investors.

2. U.S.-China Trade Resolution
Global sentiment improved significantly after the United States and China resolved their long-standing tariff dispute. The stabilization in global trade flows is expected to positively impact emerging markets, including Pakistan, by reducing economic uncertainty and fostering export-driven growth.

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3. IMF Disbursements and Economic Backing
The International Monetary Fund released critical funding to Pakistan, including:

• The second tranche of USD 1 billion under the USD 7 billion Extended Fund Facility (EFF).
• Approval of a new USD 1.4 billion under the Resilience and Sustainability Facility (RSF).

These inflows are anticipated to ease external financing needs, build foreign exchange reserves, and strengthen Pakistan’s economic reform agenda.

Sector Performance During the Stress Period

Between April 22 and May 9, many sectors saw significant declines due to heightened uncertainty:

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• Transport: -24.6%
• Refinery: -23.7%
• Pharmaceuticals: -21.6%
• Chemicals: -17.6%
• Oil & Gas Marketing: -15.3%
• Technology & Communication: -13.4%
• Cement: -10.4%
• Commercial Banks: -8.2%

Interestingly, only a few sectors managed to post gains:

• Sugar & Allied Industries: +5.6%
• Vanaspati & Allied Industries: +50.8%

Stress vs. Resolution: Index Swings

During the recent period of volatility, the KSE-100 Index experienced both steep losses and strong recoveries:

• Lowest one-day fall: -6,482.21 points
• Highest one-day gain: +9,392.36 points (May 12)

This dramatic turnaround illustrates how rapidly sentiment can shift when geopolitical tensions ease and financial inflows materialize.

Market Outlook

• Short-Term: While profit-taking may occur, the market is expected to maintain an upward bias as long as peace signals and foreign funding continue to flow.
• Medium-Term: The combination of geopolitical stability, IMF support, and improved investor sentiment lays the groundwork for a potential sustained bull market.

May 12, 2025, will be remembered as a landmark day for Pakistan’s stock market. As ceasefire talks ease regional tensions and global economic ties stabilize, the country stands to benefit from revived investor interest and greater macroeconomic certainty. If the current momentum continues, the PSX could be entering a new and exciting phase of growth.

Source: AL Habib Capital Markets (Pvt) Ltd.

⚠️ This post reflects the author’s personal opinion and is for informational purposes only. It does not constitute financial advice. Investing involves risk and should be done independently. Read full disclaimer →