The Pakistan Stock Exchange (PSX) experienced a dramatic turnaround on Friday, with the benchmark KSE-100 index surging to an intraday high of 114,546.87, a gain of 3,220.3 points (2.89%). This significant rebound follows a steep sell-off on Wednesday that saw the index plunge over 3%.

Analysts attribute the market’s resurgence to several key factors.  The most prominent is a renewed sense of optimism regarding the de-escalation of tensions between Pakistan and India.  This optimism stems from recent diplomatic efforts by US Secretary Marco Rubio, who urged both Islamabad and New Delhi to work towards a “responsible resolution that maintains long-term peace and regional stability in South Asia.” 

Further bolstering investor confidence are expectations of monetary easing.  The State Bank of Pakistan’s Monetary Policy Committee (MPC) is scheduled to meet on May 5th, with analysts predicting a 50 basis-point interest rate cut, bringing the policy rate down to 11.5%.

Adding to the positive outlook is the upcoming International Monetary Fund (IMF) Executive Board meeting on May 9. The board will review Pakistan’s $1.3 billion disbursement request under the Extended Fund Facility (EFF), and a new arrangement under the Resilience and Sustainability Facility (RSF)