The Pakistan Stock Exchange (PSX) saw a sharp decline on Monday, with the benchmark KSE-100 index shedding over 1,400 points as heightened geopolitical tensions between Pakistan and India rattled investor confidence.
After opening the day on a positive note, the index gained 941.79 points (0.82%) by 10:05 am, reaching 116,411.13. However, this early optimism quickly faded. By 3:03 pm, the index had dropped by 969.19 points (0.84%) to 114,500.15, and eventually closed at 114,063.90 — down by 1,405.44 points, or 1.22%, from the previous session.
According to Awais Ashraf, Director of Research at AKD Securities, fluctuations throughout the day were driven by mixed corporate earnings and investor anxiety over escalating cross-border tensions. “Investors remained wary due to the deteriorating situation between Pakistan and India,” he noted.
Mohammed Sohail, CEO of Topline Securities, pointed out that while some early buying occurred, market participants largely stayed cautious. “The coming days are critical, and investors are hedging against possible escalation,” he said.
Yousuf M. Farooq, Director of Research at Chase Securities, remarked that early gains were driven by relief that the weekend had passed without major conflict. “The market opened higher, but the enthusiasm faded quickly,” he explained.
Despite the drop, Farooq pointed out some stabilizing factors: inflation has hit record lows, Pakistan’s current account is in relatively good shape, and many listed companies have posted strong profits. The real effective exchange rate (REER) is currently at 101, which is considered balanced.
He added that many investors are anticipating interest rate cuts, which could revalue the market’s price-to-earnings (PE) ratio. Still, he cautioned that any significant rebound will hinge on a reduction in tensions between the neighboring countries.
Last week’s deadly attack in Pahalgam, which killed 26 people — mostly tourists — marked the most lethal incident in the disputed Kashmir region since 2000. In response, India suspended the Indus Waters Treaty, a vital bilateral agreement. Pakistan retaliated by threatening to suspend the Simla Agreement and shut its airspace to Indian flights.
AKD Securities highlighted that last week’s market volatility was fueled by these geopolitical developments, which have shaken investor sentiment and added uncertainty to an already fragile economic environment.
