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Pakistan’s benchmark KSE-100 index tumbled by over 7,100 points, nearly 6 per cent, between April 23 and April 30, shaken by the escalating geopolitical crisis triggered by the deadly April 22 terror attack in Pahalgam, which claimed 26 lives. The market rout underscores investor unease over mounting tensions between India and Pakistan.
On April 30, the index saw its sharpest recent decline, nosediving 3.09 per cent or 3,545 points to close at 111,326.57. The steep fall was attributed to investor anxiety triggered by Pakistan’s information minister warning of potential military action by India within 24 to 36 hours. According to The Economic Times report, major index constituents such as LUCK, ENGROH, UBL, PPL, and FFC led the sell-off, jointly dragging the index down by more than 1,100 points.
However, on May 2, the market staged a partial recovery, rebounding 2,785 points or 2.5 per cent to end at 114,119. Analysts warned this upswing might be a “dead-cat bounce” unless diplomatic and military tensions between the two countries begin to cool.
The tensions stem from the recent deadly terror attack in Pahalgam that killed 26 people.
India’s Response to the Pahalgam Terror Attack
The April 22 incident, allegedly executed by Pakistan-backed militants targeting tourists in the Baisaran meadow of Pahalgam, has prompted a series of retaliatory moves by India. New Delhi has suspended the Indus Waters Treaty, shut down the Integrated Check Post at Attari, ordered a reduction in diplomatic staff at respective High Commissions, and granted the military unrestricted authority to decide on the timing and nature of its response.
Prime Minister Narendra Modi reportedly told senior defence officials that the armed forces have full autonomy in choosing their response, including targets and strategy.
Signs of Military Escalation
According to the ET report citing defence sources, the Indian Army responded to several ceasefire violations along the Line of Control (LoC), particularly in the Kupwara and Poonch sectors during the nights of April 26-27 and April 27-28. Pakistani small arms fire was met with “effective retaliation”.
On the Pakistani side, the military has ramped up deployments near the border, including positioning air defence and artillery units in forward areas.
The Directors General of Military Operations (DGMOs) of both nations reportedly held a hotline conversation earlier this week to discuss the ceasefire breaches. India is said to have issued a firm warning against continued “provocations”.
