Pakistan's Karachi Stock Exchange surges 9% on India-Pak truce, IMF bailout

Pakistan's Karachi Stock Exchange jumps 9% after last week's border tension

Pakistan's benchmark equity index KSE-100 jumped 9 percent on May 12, and soon after the trading was halted for an hour, following cessation of hostilities between India and Pakistan over the weekend and the approval of IMF's board for a bailout package on Friday.

Both nations agreed on a truce over the weekend, following an escalation that led to Indian forces wrecking Pakistan's key defence assets on the night of May 9, after Islamabad targetted military installations in India's border states.

In early trade, the benchmark KSE-100 index surged to 117,104.11 points after a surge of 9,928 points during intra-day trade. It closed 9.44% higher at 117,293. The benchmark KSE-30 closed 9.76% higher at 35,833.

Amid the heightened border tensions between both the neighbouring countries, Pakistan was granted a bailout package of $2.3 billion by the International Monetary Fund (IMF) in Washington on May 9, to which India abstained from voting for.

Meanwhile, the Nifty 50 and the BSE Sensex gained more than 2.5% each to 24,700.05 and 81,689.46, respectively, as of 10:15 a.m. IST, on track to recover the 1.5% they lost since India’s strikes on Pakistan on Wednesday. The broader small and midcaps have rallied 3.5% and 3.1%, respectively on May 12.

The volatility index, or the 'fear gauge', is set to snap an eight-day gaining streak, offering relief to investors as a ceasefire seemed to be holding after an initial violation by Pakistan.

On May 8, Pakistan briefly paused trading at its stock market after index KSE-30 plunged 7.2 percent. Last year, Pakistan’s stock market delivered its highest return in 22 years, drawing renewed interest from global investors. The KSE-30 index has had a strong last one year, rising higher by over 33 percent.

The market capitalisation of Karachi Stock Exchange at present, stands to be $20.36 billion, as per data from Bloomberg. Further, while there are more than 5,000 listed companies in India, just a little over 500 firms are listed in Pakistan. The Indian stock market features among the top give globally in terms of market capitalisation at a valuation of $5 trillion.

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