The Pakistan stock market crisis deepened last week after rising tensions with India caused panic among investors. The KSE-100 index dropped sharply, losing over 7,100 points in just one week following the deadly Pahalgam terror attack in India.
Market falls as tensions escalate
The attack, which killed 26 civilians, sparked strong reactions from India. Though India has avoided military action so far, its firm diplomatic steps have rattled Pakistan’s financial markets. Investors fear the situation may escalate, and this uncertainty triggered large-scale selling.
Between 23 and 30 April 2025, the benchmark KSE-100 index fell by nearly six percent. This drop shows how deeply political tensions can affect economic stability.
Steepest drop in a single day
On 30 April, the Pakistan Stock Exchange recorded its worst performance of the year. The index tumbled by 3,545 points, over three percent, in a single session. It closed at 111,326.57 after major stocks like Lucky Cement, Engro Corporation, UBL, PPL, and Fauji Fertilizer suffered big losses.
These five companies alone pulled the index down by more than 1,100 points.
Brief rebound offers little relief
Markets made a small comeback on 2 May, with the KSE-100 gaining 2,785 points to reach 114,119. But experts believe this recovery won’t last without diplomatic progress.
Veteran investor Arif Habib told ET, “This bounce is just technical. If there’s no peace on the border, markets will stay shaky.”
India’s diplomatic actions hit hard
India’s response to the terror attack was swift. Measures included suspending the SAARC visa-free travel, withdrawing from the Indus Waters Treaty, cutting diplomatic staff, and closing the Attari border crossing.
These moves sent shockwaves through Pakistani markets. On 24 April, within minutes of opening, the KSE-100 plunged over 2,500 points. Although it recovered slightly later in the day, it still ended in the red.
Military pressure builds alongside diplomacy
While India has focused on diplomacy, it has also given its military the green light to act if needed. The Indian Army has responded to ceasefire violations near Kupwara and Poonch with measured action.
On the diplomatic side, a hotline call between the military officials of both nations ended with India issuing a strong warning to Pakistan.
Pakistan appeals to the US
Amid the crisis, Pakistan’s Ambassador to the US, Rizwan Saeed Sheikh, urged American involvement. Speaking to Newsweek, he described Kashmir as a global flashpoint and asked President Donald Trump to help de-escalate the situation.
The Pakistan stock market crisis reflects more than just numbers. It reveals the deep uncertainty facing the country’s economy amid growing regional tensions. Until peace talks resume and tensions cool down, Pakistan’s financial stability will likely remain under pressure.
