Investor panic grips Karachi Stock Exchange amid rising India-Pakistan tensions; KSE-100 records worst single-day fall since 2021.
May 7, 2025: Pakistan’s benchmark equity index, the KSE-100, plunged over 5.7% in early trade on May 7, following India’s precision military strikes on terror camps in Pakistan and Pakistan-occupied Kashmir under Operation Sindoor. This marked the sharpest single-day fall since 2021, triggering panic selling across sectors.
📊 Market Overview
- Index Movement: KSE-100 fell 5.7% at open before trimming losses slightly.
- April Performance: Down over 6% — worst monthly drop since August 2023.
- YTD Trend: Declined 1.1% in 2025 so far, after a robust 86% rally in 2024.
Meanwhile, Indian equity markets remained largely resilient. The Sensex and Nifty 50 opened marginally lower, indicating restrained investor reaction on the Indian side despite escalated cross-border tensions.
🧨 What Triggered the Crash?
The steep decline comes in the aftermath of India’s air and missile strikes targeting terror infrastructure run by Lashkar-e-Taiba, Jaish-e-Mohammed, and other groups. The escalation has deeply dented investor sentiment, especially with fears of further retaliation or prolonged instability in the region.
Also Read: Operation Sindoor: Pakistan Army ‘Authorised’ For Counteraction Amid Global Caution
📉 From Record Gains to Renewed Risk
- 2024 Recap: Pakistan’s equity market gave the highest return in 22 years in 2024, buoyed by macroeconomic reforms and a sovereign rating upgrade.
- Big Investors: Global asset managers like BlackRock and Eaton Vance had recently increased stakes in Pakistan’s $50 billion equity market.
- Current Risk Factors:
- IMF loan concerns: Pakistan missed its 6-month tax target by 6%.
- FTSE downgrade to frontier market in Sep 2024 hurt confidence.
- Political instability remains a key overhang.
📉 Analyst Insight
While the market impact is expected to be short-term, according to A. Bala of Aditya Birla MF, the underlying concerns around geopolitical escalation, fiscal mismanagement, and fragile investor trust could prolong recovery.
Tags: Pakistan economy, KSE-100, Operation Sindoor, stock market crash, India-Pakistan conflict, geopolitical impact, Pakistan IMF, FTSE downgrade, OperationSindoor,