KARACHI: In the first session after the announcement of the federal budget for 2026-27, the Pakistan Stock Exchange (PSX) staged a strong recovery rally on Monday amid renewed buying interest across the board. Investor sentiment was boosted by reports of a peace agreement between the US and Iran, seen as a first step towards lasting peace in the Middle East, which helped propel the benchmark KSE-100 index above 177,000 points.

Following the development, global oil prices resumed their decline, hitting an almost three-month low as hopes revived for the reopening of the Strait of Hormuz, easing supply concerns and reducing inflationary pressures on oil-importing countries such as Pakistan. Petroleum prices in the country had surged sharply following the outbreak of the US-Israeli war with Iran on Feb 28.

However, Pakistani leaders reportedly played a key diplomatic role in efforts to mediate between the two countries and facilitate the agreement.

Topline Securities Ltd said the benchmark KSE-100 index ended trading on a buoyant note, surging 4,639 points, or 2.69 per cent, to close at 177,039 points. Positive sentiment prevailed at the PSX as market participants welcomed the government’s reform-oriented budget measures and responded favourably to reports of a preliminary peace agreement between the US and Iran, which also eased concerns over disruptions to global oil supplies.

Falling oil prices and selective super tax break lift sentiment

Among the major contributors, United Bank, Hub Power, Lucky Cement, Engro Holdings and Fauji Fertiliser Company emerged as the primary drivers of the rally, collectively contributing 1,790 points to the benchmark’s gain.

Adding to the optimism, reports of a potential US-Iran peace agreement, expected to be formally signed in Geneva later this week, further boosted risk appetite and triggered broad-based buying across the market.

Ali Najib, Deputy Head of Trading at Arif Habib Ltd, said the PSX commenced the week on a jubilant note, with investor sentiment remaining exceptionally strong after the FY27 budget unveiled several market-friendly measures.

He said the reduction in super tax for selected sectors had significantly improved the earnings outlook for corporates.

On the monetary front, the SBP maintained the policy rate at its Monetary Policy Committee meeting at 11.5pc, in line with market expectations, providing additional support to investor confidence.

Market activity remained exceptionally strong, with traded volume rising 10.92pc to 980.5 million shares and turnover surging 51.18pc to Rs63.4 billion. Kohinoor Spinning Mills led the volume chart, with 64.1 million shares traded.

Analysts said the market could continue moving towards its record closing level of more than 189,000 points, supported by the FY27 budget, the SBP’s decision to maintain the policy rate, and improving prospects for a US-Iran peace agreement. However, investors are likely to remain watchful of implementation risks and global developments.

Published in Dawn, June 16th, 2026