Broker is busy in trading at Pakistan Stock Exchange (PSX) in Karachi on Thursday, December 5, 2024. — PPI
The stock market witnessed a volatile session on Thursday, as renewed fears of military retaliation between Pakistan and India dragged the market into negative territory.
The wave of panic selling drove the market sharply lower, triggering a regulatory circuit-breaker.
“The nervousness is likely to continue until both countries put an end to tit for tat. At this point, Pakistan is intending to retaliate, and India’s reaction to that will determine outlook,” said AAH Soomro, an independent investment and economic analyst.
“Thankfully, the US has intervened, and both countries’ National Security Advisers have established contacts. Let’s pray peace prevails.”
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index initially surged to an intraday high of 111,881.02 points, gaining 1,872.00 points, or 1.70%, from the previous close of 110,009.02.
However, the index nosedived to a low of 103,055.17 points, down 2,588.04 points, or -6.32%, as investors rushed to exit positions. The broader KSE-30 Index dropped more than 5% from its previous close, triggering a market-wide halt at 12:34:15 PM under PSX Regulations.
In a notice issued to all Trading Right Entitlement (TRE) Certificate Holders, the PSX confirmed that equity and equity-based markets had been suspended after the 5% threshold was breached. All outstanding orders were automatically cancelled by the system.
According to the PSX schedule, markets will re-enter the Pre-Open phase at 1:34:15pm, with full trading to resume at 1:39:15pm, provided no further volatility triggers a secondary halt.
The day began with strong upward momentum amid cautious optimism over possible de-escalation in regional tensions. However, the momentum was not sustained, and early gains were wiped out by a sharp reversal.
“Pakistan stocks open now up 1.7% or 1850 pts amid expectations that escalation may cool down,” said Mohammed Sohail, CEO of Topline Securities.
Tensions between Pakistan and India remain elevated after New Delhi launched an unprovoked military operation targeting multiple Pakistani cities. The action follows the Pahalgam incident in Indian Illegally Occupied Jammu and Kashmir (IIOJK), where an attack on tourists led India to initiate ‘Operation Sindoor’.
Islamabad has rejected India’s allegations and termed the strikes as unjustified aggression, resulting in the martyrdom of at least 31 Pakistani civilians. Pakistan retaliated by downing five Indian Air Force jets and several drones.
Meanwhile, investor sentiment remains focused on the upcoming International Monetary Fund (IMF) Executive Board meeting scheduled for May 9, which will decide on a $1.3 billion tranche under the Extended Fund Facility (EFF).
The agenda also includes Pakistan’s request for performance criteria adjustments and access to additional funds through the Resilience and Sustainability Facility (RSF). Approval of the package would raise total disbursements under the current programme to approximately $2 billion.
On Tuesday, the KSE-100 had dropped by 3.13%, or 3,559.48 points, closing at 110,009.02 following a sharp sell-off driven by geopolitical uncertainty.
