The bourse advanced on Tuesday on renewed hopes of a de-escalation in the Middle East, with investor sentiment also helped by reports linking Pakistan to possible mediation efforts between Washington and Tehran.
"The market opened on a positive note, driven by investor optimism surrounding the potential easing of geopolitical tensions and further supported by Pakistan's perceived geopolitical relevance following media reports suggesting the country may be mediating between the United States and Iran," said Huzaifa Riaz, Director, Mayari Securities (Pvt) Limited.
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index closed at 152,207.89 points, up 1,225.99 points, or 0.8%, versus the previous close of 152,740.37. During the session, the index traded between a high of 157,442.68, up 4,702.31 points, or 3.08%, and a low of 153,382, up 641.63 points, or 0.42%.
US President Donald Trump said on Monday he had ordered a five-day postponement of any military strikes against Iranian power plants, citing what he described as "very good and productive" conversations over the past two days about a "complete and total resolution of hostilities in the Middle East".
Iran's Fars news agency later reported there had been no direct communication with the United States or through intermediaries, citing an unnamed source, while also quoting Deputy Speaker Ali Nikzad as saying there would be no talks and that the Strait of Hormuz would remain effectively closed.
Asian equities rose on the headlines as hopes of de-escalation briefly strengthened, with Tokyo, Hong Kong, Shanghai, Sydney, Seoul, Taipei and Manila higher, though gains pared as trading progressed. Oil prices, after plunging on Monday, edged up again as the outlook remained uncertain.
Analysts said market direction would remain tied to Middle East developments, with investors also watching post-Ramazan participation and upcoming inflation data.
AKD Research said any de-escalation could trigger a sharper rebound as valuations had turned more attractive, with forward price-to-earnings at 6.6 times. Arif Habib Limited Research put the market at a price-to-earnings ratio of 7.5 times and a dividend yield of around 6.8%.
