Monitoring Desk
The Pakistan Stock Exchange (PSX) rallied on Monday, with the benchmark KSE-100 index climbing over 900 points in intraday trade, driven by robust corporate earnings and easing geopolitical tensions between Pakistan and India.
The index surged by 941.79 points, or 0.82%, to reach 116,411.13 by 10:05 AM, up from the previous close of 115,469.34. This marked a significant recovery after a week of market volatility.
“Stronger-than-expected corporate results from heavyweight companies fuelled a surge in the index at the opening,” said Awais Ashraf, director research at AKD Securities. He added that the absence of further escalation in tensions between Pakistan and India helped stabilize market sentiment and avoid panic selling.
Yousuf M. Farooq, director research at Chase Securities, highlighted several additional factors contributing to the rally, including a stable monthly current account, strong corporate profits, record-low inflation, and a real effective exchange rate (REER) of 101.
“The market opened slightly higher today, supported by relief that no major escalation occurred between India and Pakistan over the weekend [following the Pahalgam attack],” Farooq said. He also noted that expectations of upcoming interest rate cuts could lead to a rerating of the market’s price-to-earnings (PE) multiple, though significant upward movement would require a clear de-escalation of tensions between the two countries.
Mohammed Sohail, CEO of Topline Securities, echoed these sentiments, attributing the positive market momentum to the “dust settling down” in the wake of the Pahalgam attack, with no major incidents over the weekend.
The April 22 attack in Pahalgam, described as the deadliest armed incident in Indian-administered Kashmir since 2000, left 26 people, mostly tourists, dead. The attack has heightened tensions between nuclear-armed neighbors India and Pakistan, resulting in tit-for-tat measures including India’s suspension of the critical Indus Waters Treaty and Pakistan’s closure of its airspace to Indian flights.
Last week’s geopolitical volatility had significantly undermined investor confidence, according to analysts at AKD Securities. However, Monday’s rally provided a breather for market participants, as geopolitical tensions appeared to remain contained for the time being.
Despite Monday’s recovery, experts cautioned that the market’s trajectory would remain closely tied to developments in Pakistan-India relations and other macroeconomic indicators in the coming days.
