The Pakistan Stock Exchange (PSX) witnessed a significant decline on Wednesday, with the benchmark KSE index suffering a loss of 3,545.6 points or 3.09%, closing at 111,326. The market capitalization saw a staggering Rs427 billion wiped out due to intense selling pressure triggered by a statement from the information minister regarding an imminent attack by Indian forces within the next 24 to 36 hours. The minister claimed that intelligence-based information suggests India is planning an offensive against Pakistan on the pretext of Islamabad’s alleged involvement in the April 22 Pahalgam incident.
This news has scared investors, leading them to offload their holdings. The market has been under pressure since the simmering tensions began between the nuclear-armed neighbours after India unilaterally revoked the Indus Water Treaty.
Geopolitical tensions impact investor confidence
Pakistani international bonds have also been on a losing spree, with the 2036 bond suffering the most significant decline, falling 1.3 cents to be bid at 71.85 cents in the dollar. Topline Securities Ltd observed that the PSX experienced a widespread decline due to escalating geopolitical tensions, negatively affecting investor sentiment. Key heavyweight stocks, including Lucky Cement, Engro Holdings, United Bank, Pakistan Petroleum Ltd, and Fauji Fertiliser Company, collectively pulled the index down by 1,132 points.
Ali Najib of Insight Securities Ltd said, “Warmongering vibes consistently undermine investor confidence, turning them anxious and leaving them with no choice but to reduce their positions in uncertain circumstances.”
Despite the negative sentiment, market activity was robust, with trading volume rising 19.76% to 490.94 million shares and traded value increasing 7.07% to Rs31.12 billion day-on-day. In contrast, the Indian stock market remained steady, with the benchmark BSE Sensex at 80,242.24 and the broader NSE Nifty 50 largely flat at 24,334.3. The Indian rupee rose 0.91% versus the US dollar to 84.4875 on the back of inflows into equities and exporters ramping up dollar sales.
