The bourse extended its historic rally on Tuesday, briefly pushing the benchmark KSE-100 Index above the 120,000 level before closing over 1% higher, fueled by the ceasefire agreement with India, the disbursement of International Monetary Fund (IMF) funding, and expected tax relief measures in the upcoming federal budget.
The upward momentum carried over from Monday’s record-breaking session, as investors reacted positively to improved macroeconomic indicators and diplomatic breakthroughs.
“Early trade is showing the continuation of an eye-watering rally yesterday, the mutual funds were aggressively active on the business yesterday, and that trend is expected to continue today. The positive events, such as the IMF approval and a rate cut, had not been factored in due to ongoing tension with India, which are slowly being incorporated,” commented Ahfaz Mustafa, CEO of Ismail Iqbal Securities.
“Another positive will be the fact that reportedly the Pakistani budget is made at Rs290 a dollar, as reported by the newspaper, which indicates tame inflation going forward.”
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index concluded the session at 118,575.88 points, gaining 1,278.15 points, or 1.09%, from the previous closing of 117,297.73.
During the trading day, the index surged to an intraday peak of 120,067.12 points, an increase of 2,769.39 points or 2.36%, before retreating to a low of 116,859.93 points, a decrease of 437.80 points or -0.37%.
The index had previously crossed the 120,000 mark on April 4.
Finance Minister Mohammad Aurangzeb, in a Reuters interview, downplayed the fiscal impact of the military escalation, stating it could be absorbed without a revised economic assessment.
He confirmed that Pakistan would receive a $1 billion tranche from the IMF on Tuesday, part of its ongoing $7 billion Extended Fund Facility (EFF). The IMF Executive Board also approved an additional $1.4 billion under the Resilience and Sustainability Facility (RSF) to support climate-related initiatives.
Looking ahead, Aurangzeb indicated that budget talks with the IMF would take place from May 14 to 23, and the 2025–26 federal budget would be finalized within three to four weeks.
The government has proposed reducing the income tax burden for the salaried class by up to Rs50 billion, with efforts underway to offset this through other tax measures. In the first ten months of FY25, salaried taxpayers contributed over Rs450 billion, significantly exceeding the combined collections from retailers and exporters.
Adding to the market’s positive sentiment, April inflation fell to a record low of 0.3% year-on-year, while the State Bank of Pakistan reduced its policy rate by 100 basis points to 11%, signaling a move towards a pro-growth monetary policy.
These developments, coupled with diplomatic de-escalation and fresh external financing, have boosted investor confidence.
On Monday, the KSE-100 Index recorded its largest single-day gain in history, soaring by 10,123.09 points, or 9.45%, following the surprise ceasefire agreement between Pakistan and India.
This breakthrough, partly facilitated by the United States, helped ease weeks of escalating tension and triggered aggressive buying across major sectors.
