The Pakistan Stock Exchange (PSX) extended its record-breaking rally on Tuesday. The benchmark KSE-100 Index surged past the 120,000 mark again, fueled by a ceasefire with India, IMF funding approval, and hopes for tax relief in the upcoming federal budget.
Investor confidence remained strong following Monday’s historic session. Markets opened with momentum as diplomatic progress and improved economic indicators lifted sentiment.
Market Soars on Positive Developments
The KSE-100 Index rose to an intraday high of 120,067.12 points. This marked a gain of 2,769.39 points, or 2.36%, from the previous close of 117,297.73. It was the index’s return to the 120,000 level last reached on April 4.
Ahfaz Mustafa, CEO of Ismail Iqbal Securities, said early trade reflected the strong rally that began Monday. “Mutual funds were very active yesterday, and that trend is expected to continue,” he said. “The positive events like the IMF approval and rate cut were previously overshadowed by tensions with India. Now, these are being factored in.”
He also noted another positive sign — reports that the upcoming budget is being prepared using an exchange rate of Rs290 per US dollar, suggesting inflation may remain under control.
IMF Tranche and Climate Funding Confirmed
Finance Minister Mohammad Aurangzeb told Reuters that Pakistan would receive a $1 billion tranche from the IMF on Tuesday. This is part of the ongoing $7 billion Extended Fund Facility (EFF).
Additionally, the IMF Executive Board has approved $1.4 billion under the Resilience and Sustainability Facility (RSF) to fund climate-related programs.
Aurangzeb downplayed the financial impact of recent military tensions. He said Pakistan’s economic outlook remained stable and would not need revision. He confirmed that budget discussions with the IMF will take place between May 14 and May 23, with the federal budget expected to be finalized in three to four weeks.
Tax Relief on the Way
The government is working on a proposal to reduce the income tax burden by up to Rs50 billion for the salaried class. This move aims to ease pressure on middle-income earners without altering overall revenue targets.
In the first ten months of FY25, salaried taxpayers paid over Rs450 billion — significantly higher than what retailers and exporters contributed combined.
Read: India Miscalculated Pakistan’s Resolve and Capability, Says FM Ishaq Dar
Inflation Drops, Interest Rate Cut
Adding to market optimism, inflation in April dropped to a historic low of 0.3% year-on-year. The State Bank of Pakistan responded by cutting its policy rate by 100 basis points, lowering it to 11%. This marks a shift toward a pro-growth policy stance.
Monday’s Surge Sets the Tone
On Monday, the KSE-100 Index recorded its biggest single-day gain in history, climbing 10,123.09 points or 9.45%. This came after Pakistan and India agreed to a surprise ceasefire, easing fears of a prolonged conflict.
The truce, reportedly facilitated by the United States, brought calm to the region and unleashed a wave of investor buying across sectors.
With fresh funding, diplomatic stability, and positive budget signals, Pakistan’s stock market continues to gain ground. Analysts expect this bullish trend to hold as confidence builds ahead of the new fiscal year.
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