The Pakistan Stock Exchange (PSX) witnessed a sharp selloff on Thursday, with the benchmark KSE 100 Index plummeting over 1,500 points, or 1.34%, by 03:00 PM IST. The drop was triggered by escalating geopolitical tensions between India and Pakistan following the recent terror attack in Jammu and Kashmir’s Pahalgam, which killed 26 tourists.
India’s Cabinet Committee on Security, chaired by Prime Minister Narendra Modi, announced a slew of punitive measures, including suspending the Indus Waters Treaty, revoking SAARC visa exemptions for Pakistani nationals, expelling military attachés, and downsizing diplomatic missions. The Attari check post has also been shut, with a May 1 deadline for cross-border returns.
In a show of defiance, Pakistan reportedly conducted a surface-to-surface missile test on April 24, likely involving its Shaheen-III or Babur cruise missile systems. In parallel, India’s guided missile destroyer INS Surat successfully executed a precision strike using its new Medium-Range Surface-to-Air Missile system co-developed with Israel.
Sana Tawfik, Head of Research at Arif Habib Limited, told Dawn that the dip in market sentiment was “primarily driven by concerns over the India-Pakistan relationship.”
Meanwhile, the International Monetary Fund (IMF) also added pressure on Pakistani markets. The IMF downgraded Pakistan’s GDP growth forecast for FY25 to 2.6%, down from 3% in January, citing global trade disruptions and rising geopolitical risks. Inflation forecasts were revised upward to 5.1% for FY25 and 7.7% for FY26.
“The market opened lower amid fears of escalating tensions between Pakistan and India,” said Yousuf M. Farooq, Director of Research at Chase Securities. “However, positive corporate earnings have supported a partial recovery.”
Prime Minister Modi, speaking at a rally in Bihar, pledged decisive action, saying, “We will identify, track, and punish every terrorist and their backers… to the ends of the Earth.”
