Pakistan’s stock market, the Karachi Stock Exchange came under fire on April 24 as investor sentiment took a blow after geopolitical tensions with neighbouring India intensified after terror attacks in Kashmir’s Pahalgam.
Pakistan’s benchmark KSE-100 index dived nearly 2% to close at 115,019.82 points in the last session after India’s Ministry of External Affairs announced a series of measures, acting against the Pahalgam terror attack, which claimed the lives of 26 people.
The hard measures taken by India included the suspension of the Indus Waters Treaty, immediate closure of the Wagah-Attari border, and the revocation of visa exemptions for Pakistani nationals under the SAARC framework.
In response, Pakistan has convened a meeting of its National Security Committee to discuss the evolving situation.
The move comes just a day after the Pakistan Stock Exchange closed sharply lower on Wednesday, following the IMF’s downward revision of Pakistan’s GDP growth forecast to 2.6%.
The slump on the Pakistani bourses happened for a second day in a row. Just a day prior, on Wednesday, the index had slipped 1,204 points after the International Monetary Fund (IMF) cut the country’s GDP growth forecast for FY25 to 2.6%, down from the 3% it projected back in January. The IMF blamed the downward revision on Pakistan’s fiscal risks and continued external vulnerabilities in the face of Trump’s tariff wars.
Adding to the pressure, Fitch Ratings flagged concerns over a weakening rupee, political instability, and rising security tensions in Kashmir as factors that have further dampened investor sentiment.
Fitch also stated that Pakistan’s progress on difficult structural reforms will be key to upcoming IMF programme reviews and continued financing from other multilateral and bilateral lenders.