Boost comes after market volatility and rising geopolitical tensions

The Pakistan Stock Exchange (PSX) saw a strong recovery on Tuesday, with the KSE-100 index rising by 808 points, or 0.71%, reaching 114,872.18, compared to the previous close of 114,063.90.

This rebound followed a sharp decline the day before, driven by investor concerns over Pakistan’s economic situation and growing tensions with India. However, market sentiment improved after news broke of an upcoming IMF Executive Board meeting set for May 9.

According to Awais Ashraf, Director of Research at AKD Securities, the market rally was supported by the IMF’s plan to approve a $1.3 billion loan tranche under the Extended Fund Facility (EFF), as well as a new 28-month program through the Resilience and Sustainability Facility (RSF). This shift in focus helped calm investors, diverting attention from border conflicts to economic recovery efforts.

The IMF website confirmed the meeting would cover both the first review of Pakistan’s $7 billion bailout package and discussions on the climate-focused RSF program.

Just a day earlier, the market had dropped due to panic selling, as fears grew over diplomatic fallout from an attack in Pahalgam, Kashmir, which left 26 people dead—the deadliest such incident since 2000. This triggered a chain of retaliatory actions between the two nuclear-armed neighbors. India suspended the Indus Waters Treaty, while Pakistan hinted at halting the Simla Agreement and potentially closing its airspace to Indian flights.

Topline Securities reported that the market faced a tug-of-war between bullish optimism and bearish pressure. The session began strong, with the index climbing over 1,100 points, but intense profit-taking led to a drop of more than 1,600 points before settling at 114,063.90, down 1.22% for the day.