Bloodbath at PSX amid rising Pak-India tensions

Bearish sentiments gripped investors on Wednesday as the Pakistan Stock Exchange (PSX) recorded a sharp decline owing to escalating tensions with India. Data from the PSX suggests that the KSE-100, the benchmark index of the PSX, declined by over 3,500 points during intraday trading.

The market witnessed a sharp sell-off at 9:30 AM that gradually intensified over time, causing the KSE-100 index to witness a 3,646.17-point drop, which translates into a 3.17 percent decline. This caused the index to fall to 111,226.01 points, with many anticipating the freefall to continue.

Pakistani stock brokers see red pixels across their screens as all 17 indices remain in the red. At the height of the fall, the All Share (ALLSHR) index fell to 69,482.98 points after starting the session at 71,509.46 points. Unlike the KSE-100, which tracks the performance of the 100 largest and most liquid companies, the ALLSHR index records the performance of all publicly listed companies on the PSX.

However, the damage isn't limited to Pakistan, as the National Stock Exchange of India Limited (NSE) is also subdued. Reports indicate that a “bearish bias” is forming in India’s capital market, as the Put-Call ratio has fallen from 1.17 to 0.84.

According to a senior official at a reputable brokerage, the PSX is in freefall as a full-scale conflict with India could erupt in the coming days. These claims are not unsubstantiated, however, as Information Minister Attaullah Tarar announced the possibility of India pursuing military action against Pakistan.

This has severely shaken investor confidence, who continue to pull their funds out of the PSX. According to reports, the director of research at one of Pakistan’s largest brokerages outlined how fears have grown after the information minister’s press briefing.

A multitude of analysts believe that investor confidence remains shaky, especially after the information Minister revealed that India could attack Pakistan “within the next 24 to 36 hours”.  If the anticipated attack does not occur, the PSX could witness a revival; however, analysts speculate that investors will likely make investment decisions based on the state of Pak-India relations at the time.

According to reports, India has granted “operational freedom” to its military in response to the Pahalgam attack. For reference, the Pahalgam attack took place in Indian occupied Kashmir (IOK) - which Indian authorities believe was supported by Pakistan.