Pakistan Stock Market Plunges Over 2,000 Points Following India’s Firm Retaliation to Pahalgam Terror Attack
The Pakistan Stock Exchange (PSX) witnessed a massive crash on Thursday, plunging over 2,000 points in a single day as geopolitical tensions between Pakistan and India escalated following a retaliatory response by New Delhi to the recent Pahalgam terror attack.
The benchmark KSE-100 index dropped sharply by more than 2,050 points, marking one of the steepest single-day losses in recent years. The market opened in the red and continued its downward trajectory throughout the session, wiping out billions of rupees in investor wealth and triggering panic selling across all major sectors.
The market’s decline was largely attributed to India’s strong military and diplomatic response to the terror attack in Pahalgam, which resulted in multiple casualties earlier this week. While no group has officially claimed responsibility for the attack, Indian authorities have openly accused elements operating from within Pakistan of orchestrating the assault. In response, India launched what it described as a “precise and targeted” retaliatory operation along the Line of Control (LoC), intensifying fears of a broader conflict between the two nuclear-armed neighbors.
The news sent shockwaves through financial markets, with investors rushing to dump stocks amid rising uncertainty. Analysts say the psychological impact of a potential escalation in hostilities between the two countries weighed heavily on investor sentiment.
“This is not just a market correction. This is a panic reaction to a dangerous geopolitical shift,” said Arif Habib, a senior market analyst. “Whenever tensions rise with India, the first place you see the impact is in investor confidence. Today’s market reflects fear more than fundamentals.”
Trading volumes surged as investors scrambled to exit positions, with the banking, energy, and cement sectors seeing the most significant losses. Blue-chip companies bore the brunt of the selloff, with stocks such as OGDC, HBL, and Lucky Cement falling by over 5% each. Foreign investors, already cautious due to Pakistan’s fragile economic environment, were seen pulling back further amid the growing tension.
Adding to the market’s woes is the uncertainty surrounding Pakistan’s macroeconomic situation. The country is currently in negotiations for an extended bailout program from the International Monetary Fund (IMF), and any regional instability could complicate talks or deter foreign inflows.
“Pakistan’s market is extremely sensitive to external shocks, and this kind of news triggers a chain reaction. The fear of sanctions, military escalation, or even restricted trade relations can deeply impact the financial outlook,” said Mehvish Khan, an economist based in Islamabad.
The government has yet to issue a formal statement addressing the market crash, though officials have urged investors to remain calm. The Ministry of Finance released a brief note in the afternoon saying that “Pakistan’s economy remains resilient and the government is closely monitoring the situation.” However, there was little in terms of reassurance that could stabilize the plunging market.
Security across major cities has also been beefed up, with intelligence agencies reportedly on high alert following India’s action. As diplomatic efforts begin to unfold behind the scenes, market watchers are hoping for a swift de-escalation to restore investor confidence.
The coming days are likely to remain volatile, with both regional political developments and investor reactions set to dictate the PSX’s trajectory. For now, uncertainty looms large, and the financial community is bracing for further turbulence.
