KARACHI: The Pakistan Stock Exchange (PSX) witnessed sharp selling pressure on Wednesday, with its benchmark KSE-100 Index plummeting over 2% during intra-day trading amid heightened geopolitical tensions with India.
At 12:56 PM, the KSE-100 Index stood at 112,482.00, marking a decline of 2,390.18 points or 2.08% compared to the previous day's close of 114,872.18. Market sentiment remained bearish as fears of a potential military escalation between Pakistan and India gripped investors, triggering widespread sell-offs.
The current downturn comes in the wake of the April 22 Pahalgam attack in Indian-Illegally Occupied Jammu and Kashmir, which killed 26 people, including tourists. India has hinted at possible cross-border involvement without presenting concrete evidence, while Pakistan has categorically denied any role.
Tensions peaked early Wednesday when Pakistan's Information Minister Attaullah Tarar warned that credible intelligence indicated a possible Indian military strike within the next 24 to 36 hours. “India intends to use the Pahalgam incident as a false pretext for aggression,” Tarar stated in a press conference and reiterated the message in a post on social media platform X.
These developments have rattled investors, prompting them to offload shares and seek safer investment avenues. Analysts noted that the market has been under consistent pressure since the beginning of the week, and any further escalation could trigger deeper losses.
Meanwhile, global markets also faced turbulence on Wednesday. While there was some relief from signs of easing global trade tensions, the overall economic outlook remained bleak. Oil prices fell, and US Treasury yields stayed near multi-week lows, reflecting increased expectations of further interest rate cuts by the Federal Reserve.
Despite former President Donald Trump's recent decision to ease the impact of auto tariffs and hints of progress in trade talks, investor sentiment remained fragile. US Commerce Secretary Howard Lutnick announced that one agreement had been reached with a foreign partner, but details remained vague.
Adding to global unease, deteriorating US economic data pointed to worsening conditions for businesses and consumers, already burdened by heavy tariffs. "We raise the probability of a prolonged economic stagnation in the coming months, meeting the criteria for a recession, to 50%," said David Kohl, chief economist at Julius Baer.
In Pakistan, investors remain cautious as geopolitical risks mount. Market participants are closely monitoring developments between Islamabad and New Delhi, with many expecting increased volatility in the short term.
With diplomatic channels still open but strained, both governments face mounting international pressure to de-escalate and avoid further instability in an already fragile region
