The Pakistan Stock Exchange (PSX) witnessed a massive sell-off on Thursday, with the benchmark KSE-100 Index plunging nearly 6,500 points—the biggest single-day drop ever in terms of points—amid intensifying geopolitical tensions.
The index tumbled by 6,482 points, or 5.89%, closing at 103,526. Trading was temporarily halted for an hour after the index crashed almost 7,000 points, triggering an automatic suspension. When trading resumed, the market fell by another 1,400 points, touching an intra-day low of 101,599.
“If tensions between India and Pakistan worsen, we can expect continued selling until the situation stabilizes,” said Sana Tawfik, Head of Research at Arif Habib Limited, speaking to Business Recorder.
Major sectors, including automobiles, cement, banks, fertilizers, oil and gas exploration, and power generation, faced heavy selling. Prominent stocks like HUBCO, ARL, MARI, OGDC, POL, PSO, SSGC, NBP, and UBL were deep in the red.
This sharp decline follows a dramatic escalation of conflict between India and Pakistan. On Wednesday night, the Pakistan Army shot down an Indian drone after unprovoked airstrikes by India, which killed at least one person. According to Pakistan’s military spokesperson Lt. Gen. Ahmed Sharif Chaudhry, India launched multiple drone attacks across Pakistani territory, escalating the conflict to its highest point in over 20 years. Heavy shelling and airstrikes have occurred along the border, with at least 31 Pakistani casualties reported.
In retaliation, Pakistan’s military downed five Indian Air Force jets, including Rafale and MiG-21 fighter planes, after the missile attacks.
On Wednesday, the PSX had managed to recover some of its earlier losses but still closed down by more than 3,500 points at 110,009.
Globally, markets were in better shape. Asian stocks strengthened on Thursday after U.S. President Donald Trump hinted at a new trade deal. S&P 500 and Nasdaq futures rose, while European markets, including the STOXX 600 and FTSE, also posted gains. Trump’s remarks, which suggested a potential deal with Britain, helped lift investor sentiment.
Investors are keeping a close eye on upcoming trade talks between the U.S. and China, which could ease ongoing tensions between the world’s two largest economies. Meanwhile, market watchers are awaiting interest rate decisions from the Bank of England and other European central banks, although no significant changes are expected.
In the U.S., the Federal Reserve kept interest rates unchanged at 4.25%-4.5% but warned of rising inflation and economic uncertainty. Fed Chair Jerome Powell expressed concerns about whether the U.S. economy could maintain its current growth amid these challenges.
