KARACHI: Fears of a full-scale war between two nuclear-armed neighbors escalated after India launched missile attacks early Wednesday, causing a bloodbath on the Pakistan Stock Exchange (PSX), with the index plunging by 6,560 points to 107,000 intraday. However, the market later staged a strong recovery as investors engaged in value-hunting.

Topline Securities Ltd Chief Executive Officer Mohammed Sohail said the PSX plunged almost 6 percent at open but staged a recovery, halving the early losses by the end of the session. “Many stakeholders believe there will be no major escalation between the two neighbours, and the situation will stabilise eventually. Investors appear optimistic about the upcoming IMF board meeting, which will decide on the loan tranche for Pakistan,” he observed.

The benchmark KSE 100 index saw significant volatility, dropping by 6,560.83 points in early trade amid broad-based panic selling following an overnight military clash between Pakistan and India.

However, the market regained some ground after the initial shock. Investors remain cautiously optimistic, expecting stability if tensions do not escalate further. The index eventually closed at 110,009.03 points, down 3,559.48 points or 3.13pc day-on-day. The market capitalisation saw a steep decline of Rs429bn.

Value-hunting helps index trim early losses of 6,560 points

The downward trajectory of the index was primarily driven by negative contributions from key stocks such as Lucky Cement, Hub Power, United Bank, Systems Ltd, and Engro Holdings, which wiped out 967 points.

Ali Najib, Head of Sales at Insight Securities, said the geopolitical shockwave dampened investors’ confidence, which triggered panic selling since the pre-open session, and the index lost over 5.7pc in just a couple of minutes after trading resumed. Appreciably, value hunters came to the rescue and helped it recover from steep losses.

However, investors chose to trim their positions post news regarding the National Security Council (NSC) authorisation for the armed forces to undertake corresponding actions in response to India’s illegal actions.

The market participation was strong as the trading volume surged 30.79pc to 550.07 million shares, and the traded value rose 27.11pc to Rs30.12 billion day-on-day.

On contrary, the benchmark BSE Sensex ended 0.1pc higher to 80,746.78, while the broader NSE Nifty 50 index also advanced 0.1pc to 24,414.4, paring losses seen at open, as ongoing tensions offset optimism from easing global trade concerns.

Shankar Talreja of Topline Research said the benchmark KSE 100 index lost 4.1pc since April 23 amidst uncertainty over a possible attack from India following the Pahalgam incident on April 22. Due to this tension, he added that Pakistan shares remained lacklustre despite major positive developments, including the scheduling of an IMF board meeting on the first review $7bn Extended Fund Facility and Resilience Support Fund on May 9, 100bps cut in the SBP policy rate, and almost all-time low inflation reading of 0.3pc in April.

He, however, noted that based on our assessment of previous Indo-Pak conflicts — Pulwama/Balakot issue in Feb 2019 and Uri strikes in Sept 2016, the market had not reacted very negatively.

Published in Dawn, May 8th, 2025