The bourse witnessed extreme volatility on Wednesday as geopolitical tensions with India triggered a panic sell-off in early trade, sending the benchmark KSE-100 Index plunging by over 6%.
However, the market managed to recoup a significant portion of the losses by midday, buoyed by investor optimism over the upcoming International Monetary Fund (IMF) board meeting.
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index slumped to an intraday low of 107,007.68, a decline of 6,560.82 points, or -5.78%, from the previous close of 113,568.50. At its session high, the KSE-100 rebounded to 112,457.37 points, still down 1,111.13 points, or -0.98%.
“Pakistan Stock Exchange, after falling sharply by 6% at open, has recovered and is down 1% now. Many believe that after this, there will be no major escalation between the two neighbours and dust will eventually settle down,” said Mohammed Sohail, CEO of Topline Securities.
“Investors seem optimistic about the upcoming IMF board meeting, which will decide on the loan tranche for Pakistan,” he added.
The sharp early decline followed military strikes by India targeting areas in Punjab and Azad Kashmir. In response, Pakistan’s armed forces launched retaliatory operations, downing five Indian Air Force jets, including three Rafales, one Su-30MKI, and one MiG-29, as well as a combat drone.
Pakistan also targeted and destroyed Indian brigade headquarters and multiple posts along the Line of Control (LoC), according to Inter-Services Public Relations (ISPR) Director General Lt Gen Ahmed Sharif Chaudhry.
The DG ISPR confirmed that all Pakistani jets involved in the engagement returned safely. Meanwhile, 26 Pakistani civilians were martyred and 46 others injured in the Indian missile strikes, according to the military’s statement.
India claimed its offensive was in retaliation for the recent deaths of over two dozen tourists in Indian Illegally Occupied Jammu and Kashmir (IIOJK), an incident it has blamed on Pakistan — a charge Islamabad has strongly denied.
Despite the heightened military tensions, market sentiment appeared to stabilise over optimism on the IMF Executive Board meeting, scheduled for May 9, to deliberate on a $1.3 billion staff-level agreement under the Extended Fund Facility (EFF).
The agenda includes Pakistan’s request for a modification of performance criteria and an arrangement under the Resilience and Sustainability Facility (RSF).
The IMF and Islamabad had reached the staff-level agreement in March during the first review of the ongoing 28-month, $7 billion bailout programme. If approved, the latest tranche would bring total disbursements under the programme to approximately $2 billion.
On Tuesday, prior to the escalation, the KSE-100 Index had already closed lower by 0.47% at 113,568.50 points.
