PSX, Rupee to See Positive Rally Tomorrow

Pakistan Stock Exchange (PSX) and the rupee (PKR) are expected to rally tomorrow following a surprise ceasefire agreement with India and the International Monetary Fund voting to grant $2.4 billion to Pakistan. Easing tensions and the IMF’s approval of a $1 billion disbursement, along with a new $1.4 billion climate resilience plan, have improved investor confidence in Pakistan. The benchmark KSE-100 Index may stage a strong recovery as markets reopen. Investors expect a sharp upward movement of around 5 percent if stability holds. The Pakistani rupee, which had faced pressure amid heightened volatility, is also likely to recover with the renewed inflow of IMF funds. Investor sentiment was further supported by the State Bank of Pakistan’s surprise interest rate cut last week, which had been largely overlooked amid geopolitical uncertainty. Despite the improving outlook, risks remain. India has yet to lift its suspension of the Indus Water Treaty and Indian officials have accused Pakistan of violating the ceasefire hours after it was declared. Pakistan has denied this accusation. In India, foreign investors are expected to return after a brief halt. The NSE Nifty 50 Index had dropped more than 1% on Friday while the rupee (INR) ranked among Asia’s worst-performing currencies last week. Indian markets are closed on Monday for a public holiday, but traders are anticipating recovery starting Tuesday.