Pakistan stock market: Trading in KSE 100 index halted amid rising India-Pakistan conflict; index down 6%
Trading was halted for an hour at the Pakistan Stock Exchange after the benchmark index KSE 100 plunged 6.3% intraday, amid escalating tensions between India and Pakistan, as per a Reuters report.
Pakistan stock exchange: The stock market in Pakistan faced a severe selloff on Thursday, May 8, amid an escalation in tensions with India, which sent its benchmark KSE-100 over 6% lower, prompting a trading halt, according to a Reuters report.
This is the fourth straight session of losses in Pakistan's stock market. In the previous trading session, too, Pakistani stocks witnessed a meltdown after India launched military strikes against terrorist outfits in several areas in Pakistan and Pakistan-occupied Kashmir. India's response comes on the back of a terrorist attack on Indian nationals in Pahalgam in late April, which killed 26 people.
On Wednesday, Pakistan stocks had fallen as much as 6.2%, but recouped some losses to settle 3.13% lower.
The escalation between India and Pakistan comes at a time when Pakistan's $350 billion economy is in a fragile condition. Investors there await the International Monetary Fund's (IMF) decision on a possible extension of its funding facility, which is due to be out tomorrow, as per a report by Moneycontrol.
Since the Pahalgam attack on April 22, Pakistan's KSE-100 index has lost 13% of its value amid fears of a flare-up in tensions with India. Meanwhile, the KSE 30-index has fallen by a similar quantum since.
Indian stock market stays firm
At the same time, Indian stock exchanges continued to show resilience, trading largely flat for the second day after the Indian military's Operation Sindoor. However, high market volatility was also visible.
Analysts largely attribute the resilience in the Indian stock market is the non-escalatory nature of the attack in Operation Sindoor.
“What stands out in “Operation Sindoor” from the market perspective is its focused and non-escalatory nature. We have to wait and watch how the enemy reacts to these precision strikes by India. The market is unlikely to be impacted by the retaliatory strike by India since that was known and discounted by the market,” said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.
Historical data suggests that the Indian stock market has generally responded with resilience to serious geopolitical events. Except for the Parliament attack in 2001, all other incidents studied have led to positive market returns over the medium to long term.
| Nifty 50 Performance (%) Around Key Events | ||||||
| Event | Date | 1M Before | 1M After | 3M After | 6M After | 12M After |
| Kargil War 1999 | May 3, 1999 | –8.3% | 16.50% | 34.50% | 31.60% | 29.40% |
| Parliament Attack 2001 | Dec 13, 2001 | 10.10% | –0.8% | 5.30% | –0.8% | –1.3% |
| Mumbai 26/11 Attacks 2008 | Nov 26, 2008 | 9.00% | 3.80% | –0.7% | 54.00% | 81.90% |
| Uri Attack & Surgical Strikes 2016 | Sep 18, 2016 | 1.30% | –1.2% | –7.3% | 4.30% | 15.60% |
| Pulwama Attack & Balakot 2019 | Feb 14, 2019 | –1.3% | 6.30% | 3.80% | 1.70% | 12.70% |
Source: Finavenue
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