Stocks Rally as Pak-Afghan Ceasefire and IMF Deal Boost Investor Confidence
The Pakistan Stock Exchange (PSX) opened the week on a bullish note as the market reacted positively to encouraging geopolitical and economic developments. The benchmark KSE-100 Index surged 2,436.69 points, closing at 166,242.9 points, up 1.49% from the previous session.
Ceasefire Brings Relief to Investors
Investor sentiment turned optimistic following confirmation of a ceasefire agreement between Pakistan and Afghanistan after a series of border clashes. Defence Minister Khawaja Muhammad Asif confirmed that both sides agreed to an immediate halt in hostilities during talks in Doha, with a follow-up meeting scheduled in Istanbul on October 25.
This diplomatic progress eased regional tensions that had weighed on market confidence in recent weeks.
IMF Deal Sparks Economic Optimism
Adding to the positive outlook, Pakistan reached a staff-level agreement with the International Monetary Fund (IMF) for the release of the next tranche under the Extended Fund Facility (EFF) and the first under the Resilience and Sustainability Facility (RSF).
The IMF projects GDP growth at 3.6% and inflation at 6% for FY26, signaling improving macroeconomic stability. This development, coupled with declining fixed-income yields and better credit ratings, strengthened investor appetite for equities.
Domestic and Global Factors Support the Bullish Trend
Market expert Ahsan Mehanti, CEO of Arif Habib Commodities, noted that “bullish activity was driven by optimism over peace progress with Afghanistan and the IMF agreement, while strong global equity performance added further momentum.”
The market also drew strength from Pakistan’s signing of a RMB 5 billion memorandum of understanding with China to tackle the ongoing water crisis. Additionally, the government successfully raised Rs507 billion through Pakistan Investment Bonds (PIBs) and Rs776 billion via T-bills, showing steady demand in the domestic debt market.
Reserves Strengthen, Rupee Gains Slightly
On the external front, the State Bank of Pakistan (SBP) reported an increase of $21 million in foreign exchange reserves, taking the total to $14.4 billion. The Pakistani rupee also gained marginally, closing at 281.1 against the US dollar, up 0.03% week-on-week.
The stability in reserves and exchange rate added to the sense of economic resilience as Pakistan continues to navigate global financial headwinds.
Market Outlook
Analysts believe that the combination of geopolitical calm, IMF backing, and improving fiscal indicators could support continued momentum in the short term. However, sustained reforms, consistent inflows, and external stability will remain essential for long-term growth.
The KSE-100 Index, which had closed last week at 163,806.21 points, now reflects renewed investor optimism and confidence in Pakistan’s recovery narrative.
