The Pakistan Stock Exchange’s (PSX) benchmark index KSE-100 gained over 2,800 points during intraday trade on Monday as the US and Iran reached a preliminary agreement aimed towards ending a war that began over three months ago and crippled the world economy.

The KSE-100 index rose by 2,836 points (1.65 per cent) from the previous close of 172,399 to reach 175,236 points at 11am.

Yousuf M. Farooq, director of research at Chase Securities, said the market opened higher today as sentiment improved following the announcement of a deal between the US and Iran, along with expectations that the Strait of Hormuz would remain open.

Oil prices also opened lower, easing concerns over inflationary pressures going forward, he noted.

“Investors are now awaiting today’s monetary policy announcement. The market continues to trade at a price-to-earnings multiple below its long-term average, while the current account remains under control. The reduction in super tax and a budget that signals fiscal discipline have further strengthened the medium-term outlook for equities,

A sustained decline in oil prices, combined with lower interest rates over the next two years and continued earnings growth, could support an upward rerating of the stock market,” he said.

Awais Ashraf, director of research at AKD Securities, also attributed the positive trend to the US-Iran agreement.

“Reaching a preliminary agreement to end the conflict between the US and Iran boosted sentiment at the PSX. Moreover, the continuation of fiscal consolidation in the recently announced budget, coupled with relief for small and medium-sized businesses through the abolition of the super tax, has further supported market confidence,” he said.

However, he too said that investors remained cautious ahead of today’s Monetary Policy Committee (MPC) announcement.

“We expect the State Bank of Pakistan (SBP) to maintain the status quo, given the improving macroeconomic outlook. The recent decline in oil prices, a lower import bill, and the continued buildup in foreign exchange reserves are encouraging developments since the last MPC meeting.

“These factors, along with the US and Iran moving closer to a deal, and the slowdown in leading economic indicators, are likely to support the MPC’s decision to keep the policy rate unchanged,” he predicted.

Ashraf also said that real interest rates were “expected to remain more than 450 basis points positive over the next 12 months, assuming normal rupee depreciation and a gradual normalisation of oil prices through December 2026”.