The Pakistan Stock Exchange (PSX) experienced a significant downturn on April 30, 2025, with the benchmark KSE-100 index plummeting over 2,000 points amid escalating tensions between India and Pakistan following a deadly militant attack in Pahalgam, Jammu and Kashmir. The attack, which resulted in the deaths of 26 individuals, including 25 Indian tourists, has intensified fears of potential military conflict between the two nuclear-armed nations.
In response to the attack, India's Prime Minister Narendra Modi granted military leaders "complete operational freedom" to determine the mode, targets, and timing of India's response. This development has fueled speculation that India may launch military strikes against Pakistan in the coming days. Pakistan's Information Minister Ataullah Tarar further heightened concerns by stating that Pakistan possesses "credible intelligence" suggesting that India intends to carry out military action within the next 24 to 36 hours.
The uncertainty surrounding potential military escalation has led to a sharp decline in investor confidence. Market analysts attribute the PSX's significant losses to fears of imminent conflict and the broader economic implications of heightened geopolitical tensions. The Karachi Stock Exchange-100 index decreased by 1,717.35 points, or 1.5%, to stand at 113,154.83 on Wednesday morning, with intraday losses exceeding 2,000 points.
The escalating situation has also affected business activities across Pakistan. Atiq Mir, President of the Karachi Tajir Ittehad Association, noted that markets and shopping centers are experiencing reduced business operations as both traders and consumers remain apprehensive about the unfolding crisis.
This sharp market decline underscores the profound impact that geopolitical tensions can have on financial markets and the broader economy. As the situation develops, investors and policymakers will be closely monitoring the evolving dynamics between India and Pakistan, with the hope that diplomatic efforts will prevail to prevent further escalation.