Pakistan stock market crash: Karachi-100 index slumps 1,500 pts after India suspends Indus Waters over Pahalgam attack

Pakistan stock market crash: The Pakistan stock exchange (PSX) opened sharply lower on Thursday, April 24, after the Indian government implemented a series of diplomatic measures in retaliation to the Pahalgam terror attack in Kashmir that claimed the lives of 26 tourists.

The benchmark Karachi-100 index (KSE-100) dropped over two per cent or 2,500 points to 1,14,740.29 within the first five minutes of trading after investors reacted to the geopolitics tensions. By 3 PM IST, the KSE-100 index had recovered some losses but was still trading lower by 1,532.42 points or 1.31 per cent at 115,693.72, reflecting the market’s nervousness over any further escalation.

Pakistan's stock market volatility 

This is the second straight session of losses for the Karachi bourse. On Wednesday, the index had slipped 1,204 points after the International Monetary Fund (IMF) trimmed Pakistan’s GDP growth forecast for FY25 to 2.6 percent, citing fiscal risks and continued external vulnerabilities.

The Asian Development Bank (ADB), too, has lowered Pakistan's 2025 GDP growth forecast to 2.5 per cent, from 3 per cent projected in December 2024. Both projections fall short of the 3.6-per cent growth target set by the Pakistani government for the said financial year.

India's diplomatic response after Pahalgam attack 

The Cabinet Committee on Security (CCS) announced that it will shut down the Attari border for all movement, asking Indians across the border to return to India by May 1.

Additionally, the Ministry of External Affairs (MEA) also cancelled all the existing visas issued under the SAARC Visa Exemption Scheme (SVES) for Pakistani nationals, asking Pakistani citizens to leave India within 48 hours.

The overall strength of the High Commissions will be brought down to 30 from the present 55 through further reductions, to be effected by May 1, 2025. The Indus Waters Treaty is suspended for the first time ever since it was signed in 1960.

The Indian response follows the April 22 terror attack at Baisaran, near the popular hill town of Pahalgam in Jammu and Kashmir, where 26 people — mostly tourists — were killed. Baisaran, often referred to as ‘Mini Switzerland’, is a frequent stop for domestic and international visitors.