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India’s Operation Sindoor, a major military offensive targeting terrorist infrastructure in Pakistan and Pakistan-occupied Kashmir (PoK), has sent shockwaves through Pakistan’s financial markets. A day after the Indian Armed Forces launched precise missile strikes on nine terrorist installations, the KSE-100 index plummeted over 6%, forcing authorities to halt trading.
This sharp decline follows a 3% drop just the day before, marking back-to-back plunges that reflect mounting investor panic. The Pahalgam terror attack on April 22 was the trigger point, but markets spiraled further after India’s escalating economic measures, including the suspension of the Indus Waters Treaty, restrictions on imports, curbs on vessel movements, and postal delivery bans to Pakistan.
Operation Sindoor’s Market Impact
As CNN reports, the precision strikes under Operation Sindoor have escalated tensions between the two nations. While India’s stock market remains stable and strong, the Pakistani market continues to bleed capital amid widespread uncertainty.
The volatility in KSE-100 highlights the market’s vulnerability during India-Pakistan standoffs. Thin trading volumes and a lack of strong institutional investor presence have enabled rapid exits by foreign investors, worsening the downturn.
Economic Panic Deepens in Pakistan
The economic fallout extends beyond just market fluctuations. Pakistan’s reliance on the IMF has left its economy fragile. Despite early signs of economic recovery, the growing conflict risks reversing any progress. Key concerns include:
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Rising foreign capital outflows
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Persistent rupee depreciation
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Slow GDP growth
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High risk of credit downgrades in the absence of stable international support
Moody’s has also warned that the impact of escalating India-Pakistan tensions will be more damaging to Pakistan than India, given Pakistan’s structural economic weaknesses.
India’s Market Stands Resilient
Interestingly, Indian stock markets have remained resilient, demonstrating strong positive momentum despite the high-voltage military action. This contrast emphasizes the economic disparity and market depth between the two neighboring nations.
Investor Sentiment at an All-Time Low
With tensions peaking and India clearly signaling no tolerance for terror activities, investor confidence in Pakistan has plummeted. Even though valuations are low, foreign investment is drying up, and local participation remains limited.
The aftermath of Operation Sindoor has left Pakistan’s financial stability shaken. With military action, economic restrictions, and political uncertainty swirling, the KSE-100’s sharp declines reflect a deeper economic fragility. If the current tensions continue, analysts warn that Pakistan’s road to recovery could be severely delayed, or even derailed altogether.
