Trading resumes at PSX after 8% surge led to temporary halt

Trading at the Pakistan Stock Exchange (PSX) has resumed following a one-hour temporary pause triggered by a sharp rise of over 8% shortly after opening on Wednesday.

The benchmark KSE-100 index opened in the green, a move that was widely expected following the announcement of a ceasefire agreement between the United States and Iran. Pakistan played a pivotal role in the mediation process, which resulted in a two-week ceasefire following over a month of conflict.

The benchmark KSE-100 index gained 12,362 points to reach 164,035.83 points around 9:30am. Meanwhile, the KSE-30 index also climbed by 8% or 4,019 points to reach 49,957.93 points.

Consequently, trading was halted for an hour. 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.

Pakistan's role and investor confidence

Mohammed Waqas Ghani, head of research at JS Global, said Pakistan's diplomatic efforts to ease United States-Iran tensions triggered a sharp sentiment reversal at the Pakistan Stock Exchange, with a peace-driven rally highlighting both the rapid unwinding of risk premiums and the market's underlying upside potential.

According to a research note from Ismail Iqbal Securities, the importance of the development lies in what it changes for Pakistan's economic outlook.

"With the risk of prolonged conflict now reduced, pressure on oil prices, freight costs, and inflation expectations should begin to ease gradually. This does not mean conditions will normalize overnight, but it does mean that the most immediate external threat has passed.

"In our view, the ceasefire creates space for Pakistan's macro recovery to continue, while improving confidence around the external account, imported inflation, and overall market sentiment," it said.

Early on Wednesday, Pakistan announced that the Iran and the United States, along with their allies, had agreed to an immediate ceasefire, including in Lebanon, effective immediately, and invited their delegations to Islamabad on April 10 for talks aimed at reaching a lasting settlement of disputes.

Prime Minister Shehbaz Sharif announced the ceasefire in an early-morning post on X, welcoming the move and extending his “deepest gratitude” to the leadership of both countries.

Optimism after weeks of bearish sentiment

The development helped restored the confidence of investors, who have seen a massive drop in share values since the war began. The KSE-100 index had lost 22,000 points from Feb 28 to April 7 and nearly 48,000 points from its peak in Jan.

Analysts say a cooling in prices of crude oil and finished goods such as petrol and diesel are key to Pakistan's economy. The country imports around 80% of crude oil, 67% of petrol and 30% of the diesel it consumes. Therefore, the fall in prices is likely to stem inflation and convince the central bank to maintain status quo on the interest rate.

A leading trader told Nukta that dividend yields and PE have been attractive, and if talks in Islamabad bear fruit, the index would gain more in the coming sessions.