The Pakistan Stock Exchange (PSX) started Tuesday's session on a bullish note, as the benchmark KSE-100 index surged nearly 800 points in early trading following the central bank’s unexpected decision to cut the policy rate by 100 basis points.

By 10:15am, the index stood at 114,869.36, reflecting an increase of 767.13 points or 0.67 per cent.

Investor sentiment improved sharply after the State Bank of Pakistan’s Monetary Policy Committee (MPC) reduced the policy rate to 11 per cent on Monday. The cut was larger than expected, as most market participants had anticipated a 50 basis point reduction.

Buying activity was recorded in major sectors including automobile assemblers, cement, commercial banks, oil and gas exploration, oil marketing companies, power generation, and refineries. Leading gainers included HUBCO, NRL, PSO, MARI, OGDC, PPL, POL, MCB, UBL, and NBP—all of which traded in the green.

The upbeat start came a day after the market closed nearly flat at 114,102.24, having recovered from a sharp intraday loss of over 1,000 points.

Internationally, markets remained cautious. Asian stocks moved within narrow ranges amid renewed concerns over US tariffs and their potential impact on global growth. MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.2 per cent, with Taiwan down 0.3 per cent and Hong Kong’s Hang Seng losing 0.2 per cent. Japanese markets were closed due to a public holiday.

Currency movements in the region also drew attention, particularly after the Taiwan dollar's recent rally, which raised speculation about broader regional currency adjustments. In Hong Kong, authorities intervened by purchasing $7.8 billion to maintain the currency’s peg to the US dollar.

Locally, the larger-than-expected policy rate cut has raised hopes of economic stimulation. Market watchers believe the move could help lower borrowing costs, revive corporate earnings, and support the equity market after a prolonged period of high interest rates and macroeconomic uncertainty.

Analysts caution, however, that the sustainability of the current momentum will depend on upcoming budgetary measures and broader economic reforms expected in the coming months.