Analyst attributes the surge to investor optimism over a possible easing of geopolitical tensions.
The equity market surged on Tuesday as hopes of easing tensions in the Middle East boosted investor sentiment, with reports suggesting Pakistan could play a mediating role between the United States and Iran providing additional support.
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index closed at 152,207.89 points, rising 1,225.99 points, or 0.8%, from the previous close of 152,740.37. During the session, the index swung between a high of 157,442.68, up 4,702.31 points (3.08%), and a low of 153,382, up 641.63 points (0.42%).
“The market opened positively, driven by investor optimism over a potential easing of geopolitical tensions and further supported by Pakistan’s perceived geopolitical role, following reports that it may be mediating between the United States and Iran,” said Huzaifa Riaz, Director at Mayari Securities (Pvt) Limited.
US President Donald Trump announced on Monday a five-day delay in any military strikes against Iranian power plants, citing “very good and productive” discussions over the past two days aimed at a “complete and total resolution of hostilities in the Middle East.”
However, Iran’s Fars news agency later reported no direct communication with the United States, either directly or through intermediaries. The agency also quoted Deputy Speaker Ali Nikzad as saying there would be no talks and that the Strait of Hormuz would effectively remain closed.
Asian equities climbed on the news, fueled by hopes of de-escalation, with markets in Tokyo, Hong Kong, Shanghai, Sydney, Seoul, Taipei, and Manila opening higher, though gains narrowed as trading progressed. Oil prices, which had fallen sharply on Monday, edged up amid continued uncertainty.
Analysts noted that market movements will remain closely linked to developments in the Middle East, while investors also monitor post-Ramadan activity and upcoming inflation data.
AKD Research highlighted that any easing of tensions could trigger a stronger rebound, citing more attractive valuations with a forward price-to-earnings ratio of 6.6 times. Arif Habib Limited Research valued the market at a price-to-earnings ratio of 7.5 times, with a dividend yield of approximately 6.8%.
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