The Pakistan Stock Exchange (PSX) witnessed a massive crash over the past 48 hours following escalating tensions with India. On Wednesday, the benchmark KSE-100 index plunged by 1,204 points, closing at 117,226, according to Pakistan’s leading newspaper Dawn. The market continued its downward spiral on Thursday, falling another 1,455 points to trade around 115,777.33.
This marks a cumulative drop of 2,659 points in just two days, triggering panic among investors and raising alarms over Pakistan’s fragile economic condition.
What Triggered the Pakistani Stock Market Crash ?
The sharp market decline comes in the wake of the Pahalgam terrorist attack in India on April 22, which killed 28 innocent civilians. The attack was claimed by a Pakistani-based terror group, leading to heightened geopolitical tensions.
India’s government responded with tough warnings. Reports suggest that India is considering:
- Terminating the Indus Water Treaty
- Shutting down the Attari border
- Expelling Pakistani diplomats within 48 hours
- Closing its embassy operations in Pakistan
Following these developments, investor confidence in Pakistan’s economy plummeted, resulting in a heavy sell-off across sectors.
Market Data Snapshot
- KSE-100 index (April 24): Down to 115,777.33
- Volume traded: 605.17 million shares (down 18.31%)
- Trade value: ₹27.76 billion PKR (down 9.05%)
Global and Economic Warnings
Adding fuel to the fire, both the World Bank and Fitch Ratings have raised red flags over Pakistan’s economic situation.
- The World Bank warned that delays in economic reforms could reverse recent financial efforts.
- Fitch projected a steep fall in the Pakistani Rupee, forecasting it to reach ₹285/$ by June 2025, and possibly ₹295/$ by the end of FY26.
- Meanwhile, the IMF slashed Pakistan’s FY25 GDP growth estimate from 3% to 2.6%, further shaking investor confidence.
PM Modi’s Stern Message Adds Pressure
During a speech on National Panchayati Raj Day, Prime Minister Narendra Modi declared that those responsible for the Pahalgam attack “will not be spared.” He said it’s time to “bury the terrorists” and ensure they face consequences.
This strong statement further spooked investors in Pakistan, accelerating the sell-off in the KSE-100 index.
India-Pakistan Tensions = Economic Fallout
Rising India-Pakistan border tensions, combined with a fragile internal economy, have turned the Pakistani stock market into a high-risk zone. Investors are now shifting funds out of Pakistan, fearing more economic shocks and geopolitical escalations.
With diplomatic relations deteriorating, and global financial bodies losing confidence in Pakistan’s policy direction, the Pakistani stock market crash may deepen if immediate corrective actions are not taken.
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