Pakistan Stock Market Crashes After India Suspends Indus Waters Treaty Over Pahalgam Attack

Karachi-100 index plunges over 1,500 points as investors panic amid heightened geopolitical tensions and economic downgrades.

📍Islamabad | April 24, 2025:
Pakistan’s financial markets reeled under pressure on Thursday as the Karachi Stock Exchange-100 index (KSE-100) plummeted over 1,500 points following India’s unprecedented move to suspend the Indus Waters Treaty. The decision came in retaliation to the Pahalgam terror attack in Jammu and Kashmir that claimed the lives of 26 tourists, triggering a wave of diplomatic and economic actions by New Delhi.

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The index tanked 2,500 points within the first five minutes of trading, eventually recovering slightly to close 1,532 points lower, ending the day at 115,693.72.

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📉 Economic Panic Amid Escalating Tensions

This marks the second consecutive day of losses for Pakistan’s stock market, which had already slumped 1,204 points on Wednesday following a GDP downgrade by the IMF to 2.6% for FY25. The Asian Development Bank echoed a grim outlook, trimming its own projection to 2.5%, far below Pakistan’s 3.6% growth target.

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Markets reacted sharply to geopolitical instability and India’s tough stance, which included:

• Suspension of the Indus Waters Treaty, signed in 1960
• Shutting down the Attari-Wagah land border
• Cancellation of all Pakistani visas under the SAARC Visa Exemption Scheme
• Downsizing of diplomatic missions on both sides to 30 members each

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💬 Investor Sentiment in Free Fall

Analysts say investor sentiment has been severely rattled not just by economic fundamentals but by the threat of further deterioration in Indo-Pak diplomatic and trade ties. With trade routes suspended and airspace closures underway, concerns about the supply chain, cross-border investments, and water rights have intensified.

“This is not just a market correction. It’s a geopolitical shockwave,” said a senior financial analyst at Karachi-based Topline Securities. “The Indus Waters Treaty has always been considered untouchable. Its suspension is being seen as a potential tipping point.”

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🔻 Global Ripples Expected

While regional instability primarily affects local markets, investor fear may spill into emerging market ETFs and cross-border investments. Energy and agriculture stocks in Pakistan were the worst hit, given their heavy dependence on water flow from the Indus river system.

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📌 Background: Why India Took This Step

The move follows a deadly terrorist strike on April 22 in Baisaran, near Pahalgam, where 26 civilians—mostly Hindu tourists—were gunned down. India has attributed the attack to Pakistan-backed operatives, citing digital footprints traced to safehouses in Muzaffarabad and Karachi.

The Cabinet Committee on Security (CCS), led by Prime Minister Narendra Modi, announced the retaliatory measures, stating India’s resolve to respond decisively against terror and its sponsors.

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🏷️ Tags:
Pakistan Stock Market, Pahalgam Terror Attack, Indus Waters Treaty, India-Pakistan Tensions, KSE-100 Crash, Karachi Stock Exchange, Pakistan Economy, IMF Pakistan Forecast, Attari Border Closure, SAARC Visa Ban