Pakistan Stock Exchange Surges After Budget Approval and U.S.-Iran Peace Talks

KARACHI: The Pakistan Stock Exchange (PSX) experienced a robust rebound in its initial trading session following the release of the 2026-27 federal budget and emerging optimism over a potential U.S.-Iran peace agreement. The benchmark KSE-100 index climbed above 177,000 points, reflecting heightened investor confidence.

The market’s positive momentum was further reinforced by a resurgence in global oil prices, approaching a three-month low as prospects for reopening the Strait of Hormuz grew. This development eased inflationary concerns for oil-dependent economies like Pakistan, which had faced sharp petroleum price hikes after the U.S.-Iran conflict began on February 28.

Key diplomatic efforts by Pakistani authorities in mediating between the U.S. and Iran were highlighted as a contributing factor to the diplomatic breakthrough.

Declining oil prices and targeted tax exemptions enhance market dynamics

Leading the rally, United Bank, Hub Power, Lucky Cement, Engro Holdings, and Fauji Fertiliser Company collectively added 1,790 points to the KSE-100’s gain. The optimism was amplified by expectations of a formal U.S.-Iran peace deal scheduled for later in the week, which reignited risk appetite and spurred broad market buying.

Ali Najib, Deputy Head of Trading at Arif Habib Ltd, noted that the PSX opened strongly for the week, with sustained investor enthusiasm following the budget’s market-friendly provisions.

He emphasized that the super tax reductions for specific sectors improved corporate earnings prospects. Additionally, the State Bank of Pakistan’s decision to keep the policy rate at 11.5% aligned with market anticipations, further bolstering confidence.

Trading activity was vigorous, with share volume increasing by 10.92% to 980.5 million and turnover surging 51.18% to Rs63.4 billion. Kohinoor Spinning Mills topped the volume listings with 64.1 million shares exchanged.

Analysts suggest the market could approach its record high of over 189,000 points, supported by the budget’s favorable terms, the SBP’s rate stability, and improving peace talks. However, caution remains regarding implementation challenges and potential global shifts.

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