PSX extends decline as India tensions fuel sell-off

The capital market plunged sharply on Thursday as rising geopolitical tensions with India rattled investor confidence and fuelled widespread selling, reversing recent gains and wiping out a significant portion of the week’s bullish momentum.

The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index fell to an intraday low of 114,661.20, down 2,564.94 points or 2.19% from the previous close of 117,226.14. 

Although some recovery was seen, the benchmark remained under pressure throughout the session. The day’s high of 116,568.13 still reflected a decline of 658.01 points, or 0.56%, highlighting the market’s nervousness.

According to Ahfaz Mustafa, CEO of Ismail Iqbal Securities, “Markets are uncertain over our response to India's action and therefore are waiting for clarity to see if the situation escalates.”

“This, along with rollover week and result season, is creating selling pressure in the market,” he added.

The selloff comes amid heightened political tensions following recent actions by the Indian government in the wake of the Pahalgam attack in Indian Illegally Occupied Jammu and Kashmir (IIOJK). 

In response to the incident, India announced the suspension of the Indus Water Treaty and imposed a ban on Pakistani nationals — decisions that have drawn sharp criticism from Islamabad.

A high-level National Security Committee (NSC) meeting is underway in Islamabad, chaired by Prime Minister Shehbaz Sharif, to chart Pakistan’s response. 

Deputy Prime Minister and Foreign Minister Ishaq Dar, speaking on Geo News’ programme “Aaj Shahzeb Khanzada Kay Sath”, said that Pakistan would issue a “comprehensive reply” to India’s actions, noting that New Delhi had not provided any evidence linking Islamabad to the attack.

“Expressing anger over terror incidents in such a manner is unjustified,” Dar said, accusing the Modi-led government of shifting blame for its internal failings onto Pakistan. Sources suggest that the NSC is expected to discuss the internal and external security situation and review India's hastily announced actions and measures.

The volatile session follows Wednesday’s 1,204.21 point drop, during which the index closed at 117,226.14 points.