Karachi Stock Exchange Temporarily Suspended After Historic Single-Day Surge
The Karachi Stock Exchange (KSE) witnessed a dramatic rally on May 12, with the KSE-30 index surging 9% during early trade. This sharp rise, driven by easing geopolitical tensions with India and the announcement of a fresh $2.3 billion IMF bailout, prompted authorities to halt trading for one hour to stabilize the market. The sharp intra-day gain of 9,928 points pushed the KSE-100 index to 117,104.11, reflecting widespread optimism among investors after a week of intense volatility.
The rally followed an announcement over the weekend that India and Pakistan had agreed to a ceasefire, ending a severe round of hostilities that culminated in Indian precision airstrikes on Pakistani defence assets on May 9. Pakistan had earlier targeted military installations in Indian border states, which had triggered retaliatory strikes. The truce, coupled with the IMF’s formal approval of the bailout package on May 9 in Washington, bolstered investor sentiment.
Highlights:
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KSE-30 index jumps 9%, triggering an hour-long trading halt on May 12.
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KSE-100 index hits 117,104.11, rising over 9,928 points intra-day.
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Ceasefire between India and Pakistan and IMF bailout approval credited for market surge.
$2.3 Billion IMF Lifeline Helps Stabilize Investor Confidence
Pakistan’s sharp equity market rally was underpinned by the International Monetary Fund’s approval of a crucial $2.3 billion bailout aimed at stabilising the country’s struggling economy. The package was approved on May 9, amid escalating conflict with India. The funding is expected to address Pakistan’s acute balance of payments crisis, bolster its currency reserves, and restore macroeconomic stability.
India reportedly abstained from voting on the IMF board decision. Nonetheless, the bailout signals renewed international financial backing for Pakistan’s economy, which has been teetering under the weight of fiscal deficits, soaring inflation, and geopolitical stress. Investor confidence was further buoyed by expectations that the IMF funds would unlock additional bilateral support from other global lenders.
Highlights:
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IMF approves $2.3 billion bailout for Pakistan on May 9.
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India abstains from IMF vote, but market sentiment still improves.
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IMF aid expected to stabilize forex reserves and unlock more international support.
Indian Markets Rebound as Ceasefire Holds, VIX Slides
Meanwhile, the Indian equity markets also saw a strong rally on May 12, with the Nifty 50 and BSE Sensex gaining over 2.5% each, touching 24,700.05 and 81,689.46, respectively, by 10:15 a.m. IST. The gains helped offset the 1.5% decline witnessed earlier in the week following India’s strikes on Pakistan.
India’s broader markets also performed strongly, with the BSE MidCap index up 3.1% and the SmallCap index advancing 3.5%, reflecting a wider recovery in investor sentiment. The India VIX, or the volatility index, looked set to snap its eight-day rising streak, offering further relief as the geopolitical situation appeared to stabilise.
Highlights:
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Nifty 50 and Sensex recover 2.5%+, erasing last week’s losses.
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MidCap and SmallCap indices rally 3.1% and 3.5%, respectively.
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India VIX declines, ending eight-day surge as ceasefire holds.
Karachi Stock Exchange Still Lags India in Depth and Capitalisation
While Pakistan’s stock market reacted positively to geopolitical and economic developments, the Karachi Stock Exchange remains dwarfed by its Indian counterpart in terms of market depth and global presence. According to Bloomberg, KSE’s market capitalisation currently stands at $20.36 billion, in contrast to India’s $5 trillion market, which ranks among the top five globally.
Pakistan has just over 500 listed companies, while India boasts more than 5,000 listed firms, offering significantly greater diversification and liquidity. Though the KSE-30 index delivered its best returns in 22 years in 2024, structural differences between the two markets remain stark. Pakistan’s rally on May 12 also followed a sharp 7.2% plunge on May 8, when trading had to be paused amid panic selling due to escalating conflict with India.
Highlights:
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Pakistan’s KSE market cap at $20.36 billion, vs. India’s $5 trillion.
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Just 500+ firms listed in Pakistan, compared to 5,000+ in India.
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KSE-30 had seen a 7.2% fall on May 8 amid war fears before rebounding.
