Karachi/New Delhi: The recent military tensions between India and Pakistan have sparked a dramatic response in the financial markets, particularly with the Pakistan Stock Exchange (PSX) experiencing an unprecedented collapse. On Thursday, the KSE-100 index suffered its worst intraday swing, plunging over 6,400 points at its lowest, which has been attributed to investor panic following India’s airstrikes on key Pakistani cities, including Karachi and Lahore. This turmoil resulted in a staggering loss of Rs 820 billion in market capitalization in just one trading session. Over the past three days, the PSX has seen its total market value decrease by an alarming Rs 1.3 trillion, highlighting the escalating fears of economic instability.
The trading session was characterized by extreme volatility, with the index moving dramatically — reaching a brief intraday high of 1,872 points before experiencing a fall of 8,410 points. In stark contrast, the Indian financial markets showed a much more tempered reaction, with the BSE Sensex opening down 680 points at 79,654.73, a decrease of 0.85%. Similarly, the NSE Nifty fell by 141.5 points (0.58%) to 24,132.30. While caution was evident among Indian investors, the overall stability of Indian markets reflects stronger economic fundamentals and robust institutional support.
This situation illustrates the growing economic divide and differing levels of investor confidence between the two nations. Pakistan is currently facing a significant financial crisis compounded by an impending IMF board review, while India’s markets, albeit shaken, demonstrate resilience.
As the military developments continue to unfold, it is likely that both markets will remain on high alert. However, the current data underscores deep vulnerabilities within Pakistan’s financial system, which appears significantly more susceptible to external shocks compared to its Indian counterpart. The hope remains that a resolution can be found, allowing for stability and recovery across both nations’ marketplaces.