Stocks rise as Pakistan-Afghanistan ceasefire, IMF deal boost investor sentiment

The stock market extended gains on Monday, with bullish activity driven by optimism over a ceasefire deal with Afghanistan and confirmation of a staff-level agreement with the International Monetary Fund (IMF) to release the next tranche.

The benchmark KSE-100 index of the Pakistan Stock Exchange rose to an intraday high of 165,348.04 points, gaining 1,541.83 points or 0.94% from its previous close of 163,806.21 points and recorded a low of 164,7281.9 points or 164,281.9%. 164,281.9% or 0.95%.

“Upward activity was seen amid reports of ceasefire in cross-border conflict with Afghanistan and IMF staff-level agreement to release IMF tranche,” said Ahsan Mehanti, Managing Director and CEO of Arif Habib Commodities.

Rising global stocks and speculation during the earnings season played a catalytic role in the bullish activity on the PSX,” he added.

Investor confidence was boosted after Pakistan and Afghanistan agreed to an immediate ceasefire during talks in Doha, as confirmed by Defense Minister Khawaja Muhammad Asif, who said both sides would meet again in Istanbul on October 25 for further talks. The breakthrough came after a week of intense border clashes – the worst since the Taliban took over in 2021.

Market optimism was further bolstered by IMF staff-level agreement on the second review of the Extended Fund Facility (EFF) and the first under the Resilience and Sustainability Facility (RSF), with the lender projecting GDP growth at 3.6% and inflation at 6% for FY26. Falling fixed income yields, improved credit ratings and limited alternative investment avenues also encouraged continued inflows into equities.

Pakistan also signed a RMB 5 billion MoU with China to address the water crisis, while the government raised Rs 507 billion through Pakistan Investment Bonds (PIBs) and Rs 776 billion through bills, with PIB yields rising by 13–21 basis points.

On the external front, the State Bank of Pakistan’s (SBP) foreign exchange reserves improved by $21 million weekly to $14.4 billion, while the rupee appreciated marginally by 0.03 percent to close at 281.1 against the US dollar.

On Friday, the KSE-100 closed down 638.50 points, or 0.39%, at 163,806.22, after hitting a high of 165,030.82 and a low of 163,118.01. For the week, the index still gained 708 points, or 0.4%.