The Pakistan Stock Exchange (PSX) witnessed a dramatic plunge on Thursday as geopolitical tensions with India triggered panic selling, wiping out over 2,500 points within the opening minutes of trade.
The benchmark KSE-100 index opened deep in the red, nosediving by 2.12% or 2,485.85 points to reach 114,740.29 within the first five minutes of trading.
The sharp drop came on the heels of India’s abrupt suspension of the Indus Waters Treaty—a key water-sharing agreement signed in 1960—as part of a series of retaliatory diplomatic steps following a deadly incident in Indian-occupied Kashmir.
Indian authorities blamed Islamabad for allegedly supporting cross-border terrorism after an attack that left 26 civilians dead, prompting New Delhi to expel Pakistani defense personnel, shut the Wagah border crossing, and revoke SAARC visa exemptions for Pakistani nationals. The cumulative effect of these measures rattled investor confidence at home.
Vikram Misri, India’s Foreign Secretary, stated that the treaty had been placed “in abeyance,” fueling further uncertainty. “This is not a symbolic move. It reflects our growing impatience with continued provocations,” Misri said at a press briefing in New Delhi.
Investor sentiment soured rapidly, with market participants scrambling to reduce exposure amid fears of a deepening regional crisis.
“The market's reaction reflects the growing anxiety over what many see as a tipping point in Pakistan-India relations,” said a senior market analyst based in Karachi. “In times like these, investors tend to rush toward safer assets, causing sharp dips in equity markets.”
Sectoral losses were widespread, with Commercial Banks leading the slump, dragging the index down by 699.02 points. Oil & Gas Exploration Companies followed, losing 312.76 points, while Cement, Investment Companies, and Fertilizer sectors collectively contributed to over 670 points of the decline.
The steepest declines were observed in key stocks such as BWCL (-10.00%), AGL (-8.40%), EFUG (-8.38%), GADT (-5.91%), and POML (-5.38%).
Market volatility is expected to continue in the coming sessions as investors weigh geopolitical developments alongside ongoing corporate earnings announcements during the result season. Analysts also cited the final days of the rollover week as another reason for heightened market activity and caution.
Despite a partial recovery of 1,664 points later in the day, the benchmark index failed to hold the 117,000-point mark, settling below 116,221 by session end. Analysts remain wary of sustained volatility in the days ahead.
"Unless we see a de-escalation in regional tensions, particularly with India, the market will likely remain under pressure," added analyst.
The PSX had already seen a drop of 1,200 points in the previous session, making Thursday’s decline the fourth consecutive day of losses, marking one of the worst weekly openings in recent months.
