The Pakistan Stock Exchange (PSX) on Monday gained a record nine per cent increase in trading, as India and Pakistan reached an understanding to halt all military actions.

With the geopolitical situation limping back to normalcy, the KSE-100 index scored high during intraday trading.

The index opened with a gain of 9,929.48 points, or 9.26 per cent, to stand at 117,104.11 points from the previous close of 107,174.63.

The understanding reached between the two countries "has apparently boosted investor’s mood and confidence,” said Fatima Bucha of AKD Securities.

Last week, the PSX lost nearly 6.5 per cent due to the conflict with India as uncertainty prevailed in the country.

Tensions between India and Pakistan soared after the Indian Armed Forces hit terror launchpads in Pakistan and Pakistan-occupied Kashmir (PoK) last week in response to the Pahalgam terror attack.

On Saturday, the two neighbours reached an understanding to stop all firings and military actions on land, air and sea, with effect from 5 pm that day.

Following that, the situation in the stock exchange headed back to business as usual.

Due to the massive gains, the PSX was suspended for an hour after opening to control excessive volatility.

Mid afternoon, the benchmark index stood at 116,857.00 points, with a gain of 9,682.37 points (9.03 per cent).

Fatima said the recent interest rate cut by the State Bank and the approval of the USD 1 billion tranche by the International Monetary Fund (IMF) further fuelled investor enthusiasm.

Samiullah Tariq, head of research and development at Pak Kuwait Investment Company Ltd, said US President Donald Trump’s statement on increasing trade with Pakistan has also boosted investors' confidence in the market.