The Pakistan Stock Exchange (PSX) suffered a major blow on Wednesday, plunging by as much as 6,500 points during intraday trading after fears of Indian military action materialized overnight.
Pakistan’s military reported shooting down five Indian fighter jets in retaliation for late-night Indian airstrikes targeting six sites in Punjab and Azad Jammu and Kashmir.
At the opening bell (9:30 am), the benchmark KSE-100 index sank by 6,560.82 points, or 5.78%, falling from its previous close of 113,568.50 to 107,007.68. The dramatic drop triggered a temporary trading halt to stabilize the market.
This marked the second-largest intraday point loss in PSX history, surpassed only by the nearly 8,700-point decline seen last month after the United States announced new tariffs.
Although the market saw a modest recovery—rising to 112,457.37 by around 10:34 am—it slipped again to 111,171.92 by midday, still about 2,400 points below Tuesday’s close.
Market Analysts React
Yousuf M. Farooq, research director at Chase Securities, explained that the market opened under intense pressure due to “Indian strikes on unarmed civilians in Pakistan.” He noted that although there was notable selling activity, trading volumes remained relatively low as investors waited to see how the situation would unfold. Farooq expressed optimism that the market would rebound once tensions eased.
Shahbaz Ashraf, chief investment officer at Frim Ventures, echoed similar views, attributing the sell-off to “heightened geopolitical tensions following reports of Indian strikes.” He emphasized that while investor sentiment had been rattled by fears of further escalation, analysts were “cautiously optimistic,” hoping the conflict would be brief, with mediation from international powers helping to contain it.
Ashraf added that, given the improving macroeconomic indicators, many market watchers believe this correction may be temporary and could even present a buying opportunity for long-term investors looking to acquire quality stocks at discounted prices.
Samiullah Tariq, head of research at Pak Kuwait Investment Company, also viewed the selling pressure as short-term, expressing confidence that the market would recover once the immediate crisis subsides.
Awais Ashraf, research director at AKD Securities, agreed, saying the PSX was clearly feeling the effects of the overnight military developments. Like other analysts, he suggested that the market’s dip could be a good entry point, as further escalation was not widely expected.
Background & Global Perspective
In recent days, nervous investors had been scaling back holdings amid rising concerns that India might launch military action following accusations related to the deadly April 22 attack in Pahalgam, Kashmir, which left 26 people dead—mostly tourists. India has suggested, without presenting evidence, that the attackers had cross-border links, a claim Pakistan firmly denies, calling instead for an impartial investigation.
Adding to concerns, international ratings agency Moody’s warned that sustained India-Pakistan tensions could harm Pakistan’s economic recovery, disrupt foreign capital flows, and dent investor confidence.
While Moody’s expects India’s overall macroeconomic stability to remain intact, it cautioned that increased defense spending could weaken India’s fiscal strength and slow its efforts at fiscal consolidation.
