The Pakistan Stock Exchange (PSX) witnessed a spectacular rally on Tuesday, with the benchmark KSE-100 index surging over 2,500 points, driven by renewed hopes of peace between the United States and Iran. The bullish momentum reflected across the board as investors rushed to pick up shares at attractive valuations.
Market Performance
The KSE-100 index closed at 66,500 points, up 2,520 points or 3.94% from the previous session. The rally was the largest single-day gain in months, with trading volumes soaring to 450 million shares, compared to 250 million shares a day earlier. The market capitalization increased by Rs 150 billion to Rs 4.5 trillion.
Key Drivers
Analysts attributed the sharp uptick to easing geopolitical tensions after reports emerged that the US and Iran were making progress in indirect talks mediated by Oman. The prospect of de-escalation in the Middle East reduced risk premiums, prompting foreign and local institutional investors to rebuild positions.
Additionally, positive developments on the economic front, including a stable rupee and declining inflation, supported the rally. The State Bank of Pakistan's decision to maintain the policy rate at 22% also provided clarity to the market.
Sectoral Highlights
- Banking: Major banks like HBL and UBL gained 5% each on expectations of higher spreads.
- Energy: Oil and gas stocks rallied on hopes of lower crude prices. PSO and PPL surged 4%.
- Cement: Sector gained 3% on robust demand outlook.
- Technology: IT stocks outperformed, with TRG Pakistan hitting upper circuit.
Expert Views
Ahsan Mehanti, an analyst at Arif Habib Commodities, said, "The market is pricing in a potential peace deal between the US and Iran, which would reduce global oil prices and benefit Pakistan's economy. Coupled with strong corporate earnings and IMF program progress, the sentiment is extremely positive."
Another analyst, Fahad Rauf from Ismail Iqbal Securities, noted, "The rally is broad-based, indicating genuine buying interest. However, sustainability depends on concrete developments in the peace process."
Outlook
Market participants remain cautiously optimistic, with the index expected to test the 67,000 level in the coming sessions if positive news flow continues. Key resistance is seen at 66,800, while support is at 65,500.
