KARACHI: Pakistan’s stocks made history by scoring highest ever single-day gains on Monday, traders and analysts said, in a massive rally on the expectation that Shehbaz Sharif’s election as the prime minister would bring political and economic stability to the country. 

The benchmark KSE-100 Index surged by 3.8 percent or 1,700 points during the trading and closed at 46,144 points, a new record in the history of Pakistan Stock Exchange (PSX). The benchmark index broke the previous highest single-day record of June 5, 2017, when it had gained 1,566 points, according to the PSX data. 

“The market has made a history today, mainly because investors hope the uncertainty would subside and political stability would prevail,” Abdul Azeem, the head of research at Spectrum Securities, told Arab News. 

“The appreciation of Pakistani rupee and talks with the International Monetary Fund (IMF) for the completion of 7th review have played a positive role in the bullish close of the market.” 

Azeem said the market appeared to remain bullish for the short term, depending on the next move of former premier Imran Khan. 

Khan, who clung to power for almost a week, became the first Pakistani prime minister ever to be ousted by a no-confidence vote in the early hours of Sunday. 

Pakistan’s parliament on Monday elected Shehbaz Sharif as the new prime minister of the country after Khan’s party announced resignation en masse from the National Assembly. 

Khan, however, has vowed to “struggle” in the wake of his ouster, which he says was motivated by a “foreign conspiracy.” 

Investors view the change of regime as positive for the market and expect the new government to bring economic stability. 

“Falling global crude oil prices, easing economic uncertainty and speculation over positive outcome of election of new government played a key role in record close of the stocks,” Ahsan Mehanti, the CEO of Arif Habib Corporation, told Arab News. 

Pakistan’s national currency recovered some lost ground on Monday and appreciated by 0.96 percent, with the US dollar closing at Rs182.93 in the interbank market, a level previously seen on March 28. 

The currency appreciated in the open market, with the greenback sliding to Rs185 from Rs188. 

Pakistani rupee had lost its value by more than 3 percent in the interbank market since March 28, when the opposition alliance tabled the no-confidence motion against Khan, accusing him of mismanaging the economy and bad governance. 

“The rupee is appreciating because the political unrest in Pakistan has subsided to a large extent and now people are satisfied,” said Zafar Paracha, general secretary of the Exchange Companies Association of Pakistan (ECAP). 

“The business community of Pakistan considers the PML-N (the Pakistan Muslim League-Nawaz) government business-friendly and if we look at their tenure, the rupee was not much devalued and we hope that the dollar should come in the range of Rs150-160.” 

Paracha hoped fresh investment would come and the confidence of the people would be restored in the days to come. 

Monday’s rally was also fueled on hopes the new regime would take up the stalled $6 billion IMF loan program and resume talks with the global lender. 

Economists expect further stability after the formation of the new government and subsequent resumption of Pakistan-IMF talks. 

“As per my understanding the new government is being advised to immediately approach the IMF for the extension of the existing program because the fund had said that it would talk to the elected government and their condition has been met,” Dr. Vaqar Ahmed, joint executive director at the Sustainable Development Policy Institute (SDPI) told Arab News. 

“It is expected that the new finance adviser will seek extension of the IMF program for one year. There is little space for renegotiation with the IMF, but it is expected that the fund would show some flexibility by June 2022 for the budget to pass.” 

However, Miftah Ismail, a former finance minister who is mostly likely to be the candidate for the post under the new set-up, said the IMF program would be renegotiated.