KARACHI: On the eve of Labour Day, the Pakistan Stock Exchange (PSX) witnessed a bloodbath on Wednesday amid intense selling pressure triggered by a late-night statement from the information minister regarding an imminent attack by Indian forces within the next 24 to 36 hours.

The minister, in a unusual video statement on Tuesday, claimed that intelligence-based information suggests India is planning to launch an offensive against Pakistan on the pretext of Islamabad’s alleged involvement in the April 22 Pahalgam incident.

This news has scared investors who began offloading their holdings, wiping out a staggering Rs427 billion from the market capitalisation as the benchmark KSE index suffered the third largest single-day loss in absolute point-wise, snapping the overnight bullish spurt after IMF announced its board would meet on May 9 to discuss the staff-level agreement on Resilience Support Fund and the second tranche under $7bn Extended Fund Facility.

The Pakistani share market remained under pressure since the simmering tensions began between nuclear-armed neighbours after India unilaterally revoked the Indus Water Treaty.

Investors lose Rs427bn in frenzied selling

Since then, Pakistani international bonds continued their losing spree. The 2036 bond on Wednesday suffered the most significant decline, falling 1.3 cents to be bid at 71.85 cents in the dollar, Tradeweb data showed, though bid-ask spreads of around 1 cent pointed to limited liquidity.

Topline Securities Ltd observed that the PSX experienced a significant and widespread decline due to escalating geopolitical tensions, negatively affecting investor sentiment. The benchmark index lost 3,545.6 points or 3.09pc to close at 111,326. At one point, it hit an intraday low of 4,240 points, highlighting the growing anxiety in the market.

Key heavyweight stocks significantly contributed to the market’s fall. Notable laggards included Lucky Cement, Engro Holdings, United Bank, Pakistan Petroleum Ltd, and Fauji Fertiliser Company, which pulled the index by 1,132 points.

“Warmongering vibes consistently undermine investor confidence, turning them anxious and left with no choice but to reduce their positions in uncertain circumstances,” Ali Najib of Insight Securities Ltd told Dawn.

He observed that the last trading session of the month opened on a negative note due to investors’ anxiety over a potential conversion of prevailing escalation into a full-fledged war.

However, the market activity was robust as the trading volume rose 19.76pc to 490.94 million shares, while the traded value rose 7.07pc to Rs31.12 billion day-on-day.

On the contrary, the benchmark BSE Sensex was steady at 80,242.24. At the same time, the broader NSE Nifty 50 was largely flat at 24,334.3, as gains in HDFC Bank and Reliance offset pressure from escalating geopolitical tensions. The Indian rupee rose 0.91pc versus the US dollar to 84.4875 on the back of inflows into equities and as exporters ramped up dollar sales.

Published in Dawn, May 1st, 2025