Pakistan’s stocks surge 9.45% in historic single-day rally

Pakistan’s stock market witnessed a historic surge Monday as the benchmark KSE-100 index jumped 9.45% in a single session, marking its highest one-day gain in 26 years.

According to Bloomberg, the KSE-100 index ranks as the third-best performing stock market globally over the past 12 months.

The rally was largely driven by an unexpected ceasefire announcement between Pakistan and India, mediated by the United States on Saturday, May 10. The approval of the first review of Pakistan’s Extended Fund Facility (EFF) program by the International Monetary Fund (IMF), unlocking a $1 billion tranche, further boosted investor sentiment, analysts said.

KSE-100 index gained 9.45% or 10,123.1 points to close at 117,297.73 points.

“Investor confidence soared following improved geopolitical stability and the IMF’s program approval,” an analyst at Topline Securities said.

Amid tensions stemming from the April 22 incident in Pahalgam, Kashmir, the market had declined 12.5% over 12 trading sessions before rebounding 3.5% on May 9.

Despite geopolitical concerns, positive economic indicators were overshadowed, including a record-low inflation reading of 0.3% in April, the scheduling of Pakistan’s first EFF review by the IMF for May 9, and a surprise 100-basis-point cut in the policy rate to 11% by the State Bank of Pakistan.

Trading was briefly halted within five minutes of the market’s opening after the KSE-30 index rose 9.26%. Under exchange rules, trading pauses for an hour if the KSE-30 moves 5% in either direction and remains in that range for five consecutive minutes.

A total of 403 stocks closed in positive territory, with 279 reaching their upper circuit limit of 10% or a gain of 1 Pakistani rupee, whichever was higher.

“Local individual investors, who had been net sellers in recent weeks, aggressively bought stocks during the session, both directly and through mutual funds,” according to market sources.

Euro Bonds

Pakistan’s dollar bonds maturing in 2025 and 2026 gained 1.2% and 2.0%, respectively, while yields on the same bonds fell to 9.93% and 10.19%, down from 13.27% and 12.56% last Friday.

Local Bonds

Local bonds also reflected a positive trend, with the three-year bond yield dropping by 8 basis points and the five-year yield falling by 15 basis points.

At present, the market is trading at a 2026 estimated price-to-earnings (PE) ratio of 5.2x, 26% lower than the historical forward PE of 7x, according to Topline Securities.

An analyst at Ismail Iqbal Securities noted that the benchmark index closed at a record high with the largest-ever day-over-day percentage gain, hitting the upper circuit at market open.

“The rally was fueled by optimism over improved geopolitical stability and favorable economic developments, triggering aggressive buying across the board,” the analyst said.

Ahsan Mehanti of Arif Habib Corp highlighted the historic surge, driven by broad-based gains amid the surprise ceasefire between Pakistan and India, former U.S. President Donald Trump’s remarks on Kashmir, and expectations of increased trade.

“Global equity and crude oil rallies following a U.S.-China trade deal, rupee stability amid the IMF’s EFF and Resilience and Sustainability Facility (RSF) approvals, and central bank policy easing all contributed to the record bullish close at the Pakistan Stock Exchange,” Mehanti said.

Gold Prices

Gold futures dipped after U.S.-China trade talks wrapped up over the weekend. The Federal Reserve's cautious stance on rate cuts kept gold prices steady last week.

Meanwhile, the dollar rebounded after losing nearly 9% since March, supported by easing U.S.-China trade tensions.

International gold prices decreased 3.2% to close at $ 3,219.89 per ounce. In the local market, gold prices decreased PKR 10,400 to 340,500 per tola.