The Pakistan Stock Exchange (PSX) witnessed a historic rally on Tuesday, with the benchmark KSE-100 index closing at a record high of 120,450 points, gaining 1,573 points in a single day.

The surge came amid renewed investor optimism over expected tax relief in the upcoming federal budget and speculations of an interest rate cut, fueling aggressive buying across multiple sectors.

The positive sentiment was driven by renewed investor confidence, particularly following Prime Minister Shehbaz Sharif’s announcement on Monday that talks with the International Monetary Fund (IMF) over the upcoming federal budget had concluded successfully. The prime minister said the government had stabilised the economy and was now focused on sustainable growth.

According to market data, trading activity remained robust, with 57.81 crore shares of 467 companies exchanging hands. The total traded value stood at approximately Rs 26.82 billion.

The bullish sentiment followed a relatively bearish session on Monday, when the KSE-100 index had shed 813 points, closing at 111,877. However, Tuesday’s session reversed the downturn as buyers returned to the market ahead of key economic announcements.

Buying activity was seen in major sectors including cement, commercial banks, oil and gas exploration companies, oil marketing companies (OMCs), and power generation. Key index movers such as HUBCO, SNGPL, SSGC, OGDC, PPL, MCB, MEBL, and UBL traded in the green.

Market analysts believe that investors are positioning themselves in anticipation of a pro-growth budget, with potential incentives for key sectors and a policy shift expected from the central bank to support economic revival.

Today’s rally reflects renewed confidence in the market’s fundamentals and a positive outlook for the near term, especially if budgetary and monetary measures align with investor expectations.

The KSE-100’s record high is being seen as a strong signal of market resilience, despite ongoing political and economic uncertainties.

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Markets are closely watching a potential phone call between US President Donald Trump and Chinese President Xi Jinping this week. The interaction comes after Trump accused China of breaching an agreement to ease tariffs and restrictions a development that has heightened global trade tensions.

US manufacturing data showed continued contraction in May, the third consecutive month, with suppliers experiencing the longest input delivery times in nearly three years. This has added to investor caution globally.

US futures reflected the uncertainty, with Nasdaq and S&P 500 futures each down 0.2%. In contrast, European futures showed modest gains, with EUROSTOXX 50 up 0.28% and FTSE futures increasing by 0.15%.