Trading activity at the Karachi Stock Exchange was temporarily suspended for 60 minutes on Monday, May 12, after the benchmark KSE 30 index surged by 9 per cent. The trading halt was triggered when the index reached 116,650 points, reflecting strong investor sentiment following a weekend of significant geopolitical and economic developments.
The sharp uptick came after a turbulent week for Pakistan’s equity markets, during which the KSE index dropped 6 per cent. That decline followed heightened tensions between India and Pakistan, including military operations and cross-border strikes that rattled investor confidence.
Ceasefire and IMF Support Lift Market Sentiment
The market rebound was spurred by two key developments. First, both India and Pakistan agreed to cease all military operations starting 5 PM on Saturday, May 10. This truce came after a series of escalations, including India’s Operation Sindoor on May 9. The operation targeted nine terror-linked sites in Pakistan and Pakistan-occupied Kashmir, in retaliation for a recent terror attack in Pahalgam, Kashmir.
Second, the International Monetary Fund (IMF) approved two financing packages for Pakistan, releasing approximately $2.4 billion to support the country’s economic reform and climate resilience initiatives. The IMF’s decision, made in Washington on May 9, came at a critical time as the country seeks to stabilise its economy amid geopolitical turbulence. Notably, India abstained from the vote.
These developments led to a spike in investor optimism. In early trade on May 12, the broader KSE-100 index saw a massive 9,928-point intra-day rally, peaking at 117,104.11, reported Moneycontrol.
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Regional Markets React
The positive momentum wasn’t limited to Pakistan. In India, the Nifty 50 and BSE Sensex each climbed over 3 per cent on Monday, rallying nearly 2,500 points and 786 points respectively by 12:37 PM.
Volatility also showed signs of easing. The ‘fear gauge’—a key index that measures market uncertainty—is expected to break its eight-day rising streak, providing some breathing space for investors as the ceasefire appeared to hold despite an early violation by Pakistan.
