The Pakistan Stock Exchange (PSX) gained a record nine per cent on Monday — the restored calm in the market mirroring that in the region after the recent Pakistan-India ceasefire that boosted investor mood.

Saturday’s ceasefire, announced by US President Donald Trump, followed four days of tit-for-tat strikes between the nuclear-armed neighbours, as well as diplomacy and pressure from Washington.

The KSE-100 index opened with a gain of 9,929.48 points, or 9.26pc, to stand at 117,104.11 points from the previous close of 107,174.63 at 9:30am. Due to the massive gains, the PSX was suspended for an hour after opening to control excessive volatility.

Later in the day, the benchmark index reached as many as 117,327.78 points — 10,153.15 points (9.47pc) higher than yesterday’s close, at 3:15pm. This marked the highest intraday gain (points-wise) — more than double the 4,700 points surge in November 2024.

Finally, the KSE-100 closed at 117,297.73 points, with a gain of 10,123.10 points (9.45pc) compared to the previous close.

“The market has reacted jubilantly to the ceasefire announcement after Pakistan established effective deterrence against India,” noted Yousuf M. Farooq, research director at Chase Securities.

“The PSX has saluted the Pakistan Air Force this morning with a surge of over 9pc in the KSE-100 Index,” he remarked, in reference to the PAF’s actions in response to India’s strikes.

Additionally, Farooq noted that the recent interest rate cut and the approval of $1 billion tranche by the International Monetary Fund (IMF) “further fueled investor enthusiasm”.

Commenting on the future investor mood, Farooq said market participants were now expected to shift their focus towards the upcoming federal budget for the next fiscal year, which is expected on June 2.

Samiullah Tariq, head of research and development at Pak Kuwait Investment Company Ltd, listed three main reasons for the robust market activity.

Other than the ceasefire and the IMF’s green light to the disbursement, Tariq mentioned US President Donald Trump’s recent statement on increasing trade with Pakistan.

After mediating the halt of hostilities between the South Asian arch-rivals, Trump not only offered his help in resolving the Kashmir dispute but also announced he would “increase trade substantially” with both Pakistan and India.

Pakistan’s international bonds also recorded strong gains today, adding as much as 5.7 cents in the dollar, Tradeweb data showed.

On May 8, when tensions deepened as Pakistan took down 25 drones sent by India into the country, the KSE-100 suffered the largest-ever plunge of nearly 6,500 points in absolute terms. The intraday low of 8,410 points was the second-largest single-day drop (points-wise).

Prominent industrialist Arif Habib, told Geo News at the PSX in Karachi, “We have already achieved macroeconomic stability, which has made Pakistan’s economic story presentable and better.”

He also highlighted the interest rate cut and the IMF’s approval as contributors to the positive market activity.

On the ongoing political situation, Habib said it was a good opportunity for “these political matters” to be discussed and settled in the parliament. “There will be no more obstacles for Pakistan’s progress then,” he stressed.

Awais Ashraf, director of research at AKD Securities, pointed out the heightened possibility of further improving ties with Gulf countries due to Pakistan’s enhanced geopolitical position.

“This brief conflict has also demonstrated our military and technological superiority over India, strengthening our geopolitical position. As a result, it is likely to enhance ties with Gulf countries amid regional tensions and support growth in our defence and technology exports,” Ashraf told Dawn.com.

While noting the investor zest in light of the Pak-India “conflict ending with dominance”, he said the attention was now expected to shift towards improving macroeconomic indicators, including historically low inflation and a record-high current account surplus.

Pakistan’s consumer inflation rate plunged to an all-time low of 0.3pc year-on-year in April, while the $1.195bn current account surplus in March was the highest-ever monthly surplus.

Indian benchmarks eye best day in nearly a year

Meanwhile, Indian shares also rallied today.

India’s benchmarks jumped over 3pc and were on track to log their best session in almost a year after the country reached and held a ceasefire with Pakistan.

The Nifty 50 and the BSE Sensex gained about 3.25pc each to 24,787.8 and 81,958.04, respectively, as of 1:12pm IST (12:42pm PKT), on track to recover the 1.5pc they lost since India’s strikes on Pakistan on May 7.

If gains hold, the benchmarks will log their best single-day jump since June 5, 2024, when markets surged after the ruling National Democratic Alliance’s victory in the national elections.

“Assuming the ceasefire is adhered to by both countries, we keep all our macro forecasts unchanged,” Barclays said in a note.

“We see India grow at a solid 6.5pc year-on-year in FY25-26, benefitting from relative insulation to global trade uncertainty and strong progress in ‘trade talks’ with the US administration,” it added.

All 13 major sectors logged gains today. The broader small- and mid-caps rallied 4pc and 3.6pc, respectively.