Pakistan Stock Market Rebounds After Four-Day Slump Amid India Tensions
On Friday, May 9, the Pakistan stock market showed signs of recovery after enduring four consecutive days of heavy losses, which had been driven by heightened tensions between India and Pakistan.
At 2:20 PM IST, the Karachi Stock Exchange 100 (KSE-100) index climbed 1,026 points or 1%, reaching 103,700, according to Bloomberg data. The index had earlier surged as much as 2% during intraday trading.
The previous day, the KSE-100 plummeted by over 6% during intraday deals, prompting a temporary trading halt.
Over the past four sessions, the index dropped by 9.5%. Since April 22—following the terror attack in Pahalgam—the index has declined by 12.5%.
Military Escalation Triggers Investor Panic
The recent plunge in the Pakistani market was triggered by escalating military conflict between India and Pakistan.
After a terror attack in Pahalgam, Kashmir, claimed the lives of 26 civilians, India responded with military strikes targeting nine locations in Pakistan and Pakistan-occupied Kashmir.
These operations were described as “precise and restrained” and aimed at being “non-escalatory in nature.”
Further conflict arose when Pakistan attempted fresh drone and missile strikes on Indian military sites, including in Jammu and Pathankot, on Thursday night.
India successfully intercepted these attacks at 15 different locations in northern and western parts of the country, according to a PTI report.
Amid the rising military tensions, Pakistan’s Ministry of Economic Affairs appealed for international financial assistance.
“Govt of Pakistan appeals to International Partners for more loans after heavy losses inflicted by enemy. Amid escalating war and stocks crash, we urge international partners to help de-escalate,” the Ministry posted on X.
Indian Markets Also Face Pressure
The Indian stock market, which had shown resilience during the initial rise in tensions, experienced a decline on the same day.
As of 11:55 AM, the BSE Sensex was down by 750 points or 0.94%, standing at 75,580. The NSE Nifty 50 index was also down by 230 points or 0.96%, settling at 24,041.
Record Rally After Signs of Ceasefire
On the following Monday, the Pakistan Stock Exchange (PSX) staged a historic rally as tensions between India and Pakistan appeared to ease.
The KSE-100 index soared by 9,928 points during intraday trade, reaching 117,104.11 points—the largest single-day gain on record.
The surge, more than 9% higher than the previous close of 107,174.63, triggered a trading suspension in line with market regulations due to extreme volatility.
Market analysts attributed the surge to improved investor sentiment following announcements of a ceasefire between the two countries.
By the time trading was paused, PSX had recorded over 60 million shares traded with a turnover exceeding Rs 4.37 billion. Trading resumed at 10:42 AM.
A Volatile Week for PSX
Despite the Friday recovery and Monday’s record rally, the stock market remained volatile throughout the week. The KSE-100 index dropped 6,939 points, or 6.1% week-on-week, closing just above 107,000 amid geopolitical uncertainties.
On Monday, the PSX opened with a steep fall of 1,036 points but closed nearly flat, ending at 114,102, as investors reacted to rising tensions with India and ambiguity surrounding the State Bank’s policies.
Tuesday brought another decline of 534 points as optimism around a 100bps rate cut by the State Bank quickly faded due to renewed fears over the India-Pakistan standoff and a Moody’s warning on economic stability.
On Wednesday, market losses deepened with the index dropping over 6,500 points shortly after the session opened due to escalating border tensions.
By Friday, the market had bounced back with a strong gain of around 3,650 points, partially offsetting the previous day’s losses.
The week ended with the KSE-100 index at 107,175, showing a week-on-week loss of 6,939 points or 6.08%.
Sectoral breakdown revealed the most negative contributions came from banks (-1,637 points), exploration and production (-905 points), cement (-738 points), technology (-508 points), and pharmaceuticals (-436 points). The only sector with a positive contribution was sugar, adding just 7 points.
In its market review, Arif Habib Limited (AHL) noted that the KSE-100 remained largely in negative territory throughout the week due to escalating regional tensions and uncertainty over future developments.
