KARACHI: Stocks rallied on Monday as falling global oil prices and renewed optimism over a possible US-Iran peace agreement lifted investor confidence, while positive IMF-related developments and progress on a proposed retailer tax framework further boosted market sentiment.
The benchmark KSE-100 Index at the Pakistan Stock Exchange (PSX) surged during intraday trading, climbing as much as 3,675 points, or 2.2%, to reach 171,519.26. The index later traded around 170,377.63, still showing a gain of more than 2,500 points compared to the previous close of 167,844.24.
Market analysts linked the rally to easing geopolitical tensions in the Middle East and declining crude oil prices, which are considered beneficial for Pakistan’s import-driven economy.
“The market is attempting to recover previous levels due to lower oil prices and expectations of reduced hostilities in the region,” said Ahfaz Mustafa, Chief Executive Officer of Ismail Iqbal Securities.
He noted, however, that investor activity remained somewhat cautious ahead of the upcoming federal budget, which could become the next major trigger for the market once oil prices stabilise.
Brokerage firm Ismail Iqbal Securities said improving prospects for a US-Iran understanding had strengthened sentiment across commodity and equity markets, with oil prices falling to their lowest level in two weeks.
The firm also highlighted encouraging signals from the International Monetary Fund (IMF), whose Executive Board reportedly described Pakistan’s implementation of programme conditions as “exceptional” during recent discussions.
According to officials familiar with the talks, the IMF also dismissed concerns raised by India regarding the use of loan funds.
Meanwhile, progress toward a simplified fixed tax regime for retailers added to the positive outlook. The proposed scheme, expected to be included in the Finance Bill 2026-27, would apply to retailers with annual turnover of up to Rs200 million.
Internationally, crude oil prices dropped sharply as hopes grew that Washington and Tehran were edging closer to a diplomatic breakthrough. Brent crude fell nearly 6% to around $97.69 per barrel, while US West Texas Intermediate dropped to approximately $90.85 both hitting their lowest levels since early May.
US President Donald Trump said over the weekend that Washington and Tehran had made significant progress toward a possible agreement aimed at reopening the Strait of Hormuz, a critical route for global oil shipments.
Despite the optimism, negotiations reportedly remain complicated, with unresolved issues including Iran’s enriched uranium stockpile, the release of frozen Iranian assets, and broader regional security concerns.
Asian stock markets also reacted positively to the developments, with major indexes across Tokyo, Shanghai, Sydney, Singapore, Bangkok, Jakarta, and other regional markets posting gains in early trade.
In the previous trading session on Friday, the KSE-100 Index had declined by 670 points to close at 167,844.25. However, despite the drop, the benchmark still recorded a weekly gain of 2,248 points, or 1.4%.
