Pakistan's stock markets tumbled on Wednesday as investors reacted sharply to India's military operation — called Operation Sindoor — in response to the deadly April 22 terror attack in Pahalgam, Jammu and Kashmir.
The benchmark KSE-30 index dropped more than 6%, while the broader KSE-100 index plunged as much as 5.7% in early trade before trimming some of its losses. The sharp selloff underscores investor concerns over a potential military escalation between the two nuclear-armed neighbours.
India said on Wednesday morning that it had conducted “a precise and restrained response” targeting nine locations in Pakistan, including Bahawalpur, Muridke, Tehra Kalan, Sialkot, Bhimber, Kotli, and Muzaffarabad. The strikes are the deepest breach into Pakistani territory since the 1971 war.
New Delhi said the operation targeted only “known terror camps” and avoided Pakistani civilian, economic or military assets. But Pakistan's military confirmed eight casualties and multiple injuries, and its Foreign Ministry called the action an “act of war".
The retaliatory strikes followed a brutal assault on April 22, when five armed militants attacked non-Muslim tourists near Pahalgam in Indian-administered Kashmir, killing at least 28 civilians. Indian officials blamed Pakistan-based groups for the attack and subsequently suspended the Indus Waters Treaty, a key bilateral water-sharing agreement.
Pakistan said it responded to India's action with expected tit-for-tat blows, although details of its counter-strike remain limited.
The flare-up has raised fears of another prolonged standoff. The last such episode was in 2019 after a suicide bombing killed 40 Indian paramilitary personnel. That triggered India's first airstrikes on Pakistani soil since 1971, followed by the capture of an Indian pilot who was later released.
Despite the geopolitical tensions, Indian equities remained resilient. As of 10:15 a.m., the Nifty and Sensex were down 0.32% and 0.05%, respectively, after opening higher. Foreign investors stayed net buyers of Indian equities for the 14th straight session on Tuesday, showing continued confidence in the Indian market.
While the region remains on edge, historical patterns suggest Indian markets have typically weathered cross-border conflict.
Catch live updates on Operation Sindoor here.
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