On April 24, 2025, the Pakistan Stock Exchange (PSX) experienced a sharp decline. The KSE-100 index plummeted 2,485 points within minutes of trading, reaching 114,740.29. By midday, losses moderated to 1,196 points, with the index at 116,030.02.
The drop, one of the steepest in recent sessions, follows India’s diplomatic measures after the April 22 Pahalgam terror attack, which killed 26 tourists in Jammu and Kashmir and intensified regional tensions.
Market Volatility and Decline
The KSE-100, which hit a record 120,000+ earlier in 2025, has faced consecutive declines, driven by investor uncertainty and profit-taking after a 60% year-to-date rally. Yousuf M. Farooq of Chase Securities noted, “The market opened lower amid fears of escalating India-Pakistan tensions,” though positive corporate earnings aided a partial recovery.
India’s response to the Pahalgam attack, attributed to the Lashkar-e-Taiba-linked Resistance Front, included:
- Indus Waters Treaty Suspension: The 1960 treaty, governing 135 million acre-feet of water critical to Pakistan’s agriculture, was paused until Pakistan halts alleged “cross-border terrorism”.
- Attari-Wagah Border Closure: The trade and passenger crossing, which handled Rs3,886 crore in 2023-24, will shut immediately, with returns allowed until May 1, 2025.
- Visa and Diplomatic Cuts: Pakistani nationals face a 48-hour exit order under the SAARC Visa Scheme, military advisers were expelled, and High Commission staff in both nations will drop from 55 to 30 by May 1, 2025.
Foreign Secretary Vikram Misri cited “cross-border linkages” without public evidence, prompting Pakistan’s National Security Committee to convene on April 24.
Economic and Investor Sentiment
The blockade’s timing, alongside the IMF’s lowered 2.6% GDP forecast for Pakistan and a weakening rupee (projected at 285/USD by June 2025), fueled bearish sentiment. X posts reflected investor panic (#KSE100), with some noting partial recovery by 11:00 a.m.. The closure of the Attari-Wagah border, a key trade route for goods like dry fruits and cement, threatens small traders and exporters.
Read: India Suspends Indus Waters Treaty, Cuts Pakistan Ties After Pahalgam Attack
The KSE-100’s 2.12% drop reflects genuine geopolitical fears, but the partial recovery suggests resilience driven by domestic liquidity (75.8% KSE ownership). India’s treaty suspension, affecting Pakistan’s water-dependent agriculture (80% of Indus flows), is a high-stakes move that may trigger World Bank mediation, as Senator Sherry Rehman called it “anti-humanitarian”.
Investors await Pakistan’s diplomatic response and the May 2025 monetary policy decision, which could influence the KSE-100’s trajectory.
