KARACHI: The Pakistan Stock Exchange (PSX) witnessed a remarkable rebound on Friday, with the benchmark KSE-100 Index surging by 2.62% amid renewed investor optimism. The sharp rally was driven by hopes of de-escalating tensions between Pakistan and India, expectations of a monetary policy rate cut, and the upcoming International Monetary Fund (IMF) board review.
Market Rebounds from Sharp Losses
The KSE-100 Index closed at 114,250.59 points, up by 2,924.02 points from Thursday’s close of 111,326.57. The index touched a session low of 112,820.07, still marking a gain of over 1,493 points. The surge followed Wednesday’s steep drop of over 3%, highlighting a strong investor comeback.
“This is a peace rally,” said AAH Soomro, an independent investment and economic analyst. “US intervention encouraging communication between Pakistan and India is calming market nerves. If diplomatic engagement continues, the market rally may persist.”
Diplomatic Efforts Fuel Confidence
The rally gained strength after U.S. Secretary Marco Rubio urged both Islamabad and New Delhi to pursue “a responsible resolution” for lasting peace in South Asia. U.S. State Department spokesperson Tammy Bruce also confirmed ongoing communication with both nations.
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These diplomatic signals soothed investor fears of military escalation and gave fresh hope for regional stability, which had been shaken earlier in the week.
Monetary Easing Anticipated
Adding to the market’s momentum were expectations of monetary easing. The State Bank of Pakistan’s Monetary Policy Committee is scheduled to meet on May 5, and analysts widely predict a 50 basis-point rate cut, lowering the policy rate to 11.5%.
In its March meeting, the SBP had kept rates unchanged, citing inflation and external account risks. However, brokerage house Arif Habib Limited noted that “a sustained disinflationary trend and ample real interest rate buffer create room for a cautious rate cut without destabilizing macroeconomic indicators.”
IMF Board Meeting in Focus
Investors are also closely watching the IMF Executive Board meeting on May 9, where Pakistan’s $1.3 billion disbursement under the Extended Fund Facility (EFF) will be reviewed. The board will also consider requests for performance criteria modifications and a new arrangement under the Resilience and Sustainability Facility (RSF).
In March, Pakistan secured a staff-level agreement with the IMF under the $7 billion programme. If approved, the next disbursement will raise total funding to $2 billion.
Outlook: Calm Could Drive Further Gains
Analysts believe the combination of improving geopolitical signals, expected monetary easing, and IMF disbursement prospects could fuel continued market momentum — provided political stability is maintained.
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