Pakistan stocks: Karachi-100 tumbles 3,100 pts, India's Sensex, Nifty hold the ground

Pakistan stocks took a beating in Wednesday's trade, with the benchmark Karachi-100 or KSE100 tumbling over 3,100 points or nearly 3 per cent, following an attack on nine terror bases in Pakistan and Pakistan-occupied Kashmir by Indian forces.

The KSE100 last traded at 1,10,454.95, down 3,113.55 points, or 2.74 per cent. The index had settled 0.47 per cent lower at 113,568.51 on Tuesday. Amid the recent rise in tensions with India, the Pakistani index has fallen 4.4 per cent in the past one month. 

A Pakistani foreign ministry release confirmed strikes in Bahawalpur, Kotli, Muzaffarabad and Muridke. Gulpur, Bhimber, Bagh, Chak Amru and Sialkot were some additional sites reportedly hit by Indian missiles. 

Following this, Pakistani stocks such as Agritech Limited or AGL (down 8.85 per cent), Pakistan Services Limited or PSEL (8.64 per cent), Yousaf Weaving Mills (8.22 per cent), Pakistan Tobacco Company (down 8.02 per cent) and Pakgen Power Limited (down 6.69 per cent) nosedived up to 9 per cent.

In contrast, domestic indices Sensex and Nifty were relatively calm, falling 0.3 per cent each. Sensex stood at 80,381.06, down 260.01 points or 0.32 per cent. Nifty was trading at 24,289, down 90.60 points or 0.37 per cent.

Analysts noted a retaliation by India following the Pahalgam terror attack that killed 26 tourists was all likely and the Indian market was mostly discounting the development. 

The overnight missile attack was the first such move since the 1971 war when India’s Army, Navy, and Air Force launched joint precision strikes on nine terror hubs in Pakistan and PoK, said Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd said. 

"Markets now hinge on three catalysts: further military action, global tariff progress, and the US Fed’s policy decision on May 7. Nifty remains volatile with key support at 24,171," Tapse said.

Bajaj Broking said the past geopolitical shocks such as the Indo-Pak conflict have shown limited downside (5.7 per cent average drawdown) and a strong rebound potential, with six-month forward returns of average 19 per cent. 

"While short-term caution is reasonable, history shows that Indian markets demonstrate strong resilience once clarity returns. Unless accompanied by broader economic or global shocks, Indo-Pak tensions have not had a lasting negative impact. Investors should focus on fundamentals, not fear." said Pankaj Singh, Founder at SmartWealth.ai.

Following the Pahalgam terror attack, India suspended the Indus Waters Treaty of 1960, which could severely reduce Pakistan’s water supply, Moody's said. 

"Sustained escalation in tensions with India would likely weigh on Pakistan’s growth and hamper the government’s ongoing fiscal consolidation, setting back Pakistan’s progress in achieving macroeconomic stability," the global rating agency said on May 5.