The Pakistan Stock Exchange (PSX) plunged sharply on Wednesday as tensions between Pakistan and India escalated. The benchmark KSE-100 index fell by over 3,500 points, or 3.09%, to close at 111,326.57. Analysts attribute the steep decline to investor anxiety over potential Indian military action against Pakistan.
Information Minister Attaullah Tarar stated that “credible intelligence” reports indicated India was planning to conduct military action within the next 24 to 36 hours. Mohammed Sohail, chief executive of Topline Securities, said the stock market decline was due to “news of a likely attack in the next few days.” Awais Ashraf, director of research at AKD Securities, noted that investor concerns intensified following the information minister’s press briefing. Yousuf M.
Farooq, director of research at Chase Securities, mentioned that the market was under pressure due to the suggestion that India might take military action within the next 24 to 36 hours.
Kashmir tensions impact Pakistan stocks
Sana Tawfik, head of research at Arif Habib Limited, cited geopolitical tensions between India and Pakistan as the primary reason for the market’s slump.
The heightened tensions follow a recent attack in occupied Kashmir. On Tuesday, India had given its military “operational freedom” to respond to the Pahalgam attack. Tarar emphasized that Pakistan rejects India’s self-assumed role of judge, jury, and executioner in the region as reckless.
Pakistan’s international bonds also dropped by more than 1 cent following the information minister’s statement, with the 2036 bond experiencing a 1.3-cent decline, bid at 71.85 cents per dollar. Meanwhile, Indian shares remained relatively flat but were affected by the ongoing tensions with Pakistan. Anita Gandhi, founder and head of institutional business at Arihant Capital Markets, said, “For now, geopolitical tensions with Pakistan have overtaken U.S. tariffs in investors’ minds.
The situation continues to develop, and both nations are on high alert as they navigate the geopolitical tensions.
Economic experts are closely watching the situation, as continued unrest could further destabilize the markets and affect broader financial conditions.
Image Credits: Photo by Markus Spiske on Unsplash
