The Pakistan Stock Exchange (PSX) witnessed its largest single-day decline in history on Thursday, with the benchmark KSE-100 index plummeting by 6,482.21 points (5.89%) to close at 103,526.82. The sell-off, driven by escalating military tensions between Pakistan and India, erased nearly Rs 820 billion in market capitalization in a single session, bringing the total loss over three days to Rs 1.3 trillion.
Investor sentiment collapsed after Pakistan’s military reported intercepting 25 Indian drones, with one partially striking a military target. The news triggered panic selling, leading to extreme volatility—the KSE-100 swung by a record 10,282 points intraday. Trading was halted for an hour after the KSE-30 index dropped over 5%, activating a circuit breaker.
Sector-wide declines were led by Fauji Fertiliser, Mari Petroleum, and United Bank, which collectively wiped 2,051 points off the index. Despite early gains of 1,872 points, the market reversed sharply after reports of cross-border drone attacks. Foreign investors bought shares worth Rs 476.9 million, but domestic selling pressure dominated.
Globally, Indian markets also fell, with the Nifty 50 and Sensex dropping 0.58% and 0.51%, respectively. Meanwhile, gold prices in Pakistan slid by Rs 4,200 per tola, and the rupee depreciated slightly against the dollar.
Analysts attributed the crash to geopolitical uncertainty, a weak rupee, and declining dollar bonds. Mohammed Sohail of Topline Securities noted, “Fear of war overshadowed fundamentals.” However, partial recovery was seen Friday as the KSE-100 rose 0.17% amid hopes of de-escalation.
The IMF’s Executive Board is set to review Pakistan’s 7 billion loan program on Friday, 1 billion in funding. Market stability hinges on geopolitical developments, with further declines likely if tensions persist.
Also read: Border crisis intensifies as Pakistan, India exchange fire overnight
