Karachi, May 10, 2025 – The Pakistan Stock Exchange (PSX) closed the week ended May 9 with significant losses, as the benchmark KSE-100 index plummeted by 7.2%, primarily driven by escalating tensions between Pakistan and India. The geopolitical uncertainty has rattled investor confidence, triggering widespread sell-offs and heightened market volatility.
According to analysts at Topline Securities Limited, the steep weekly decline in the KSE-100 index was directly linked to increasing tensions along the Pakistan-India border. Reports of cross-border hostilities and rising diplomatic strain kept investors cautious throughout the week. The environment of uncertainty led to significant selling pressure from individual investors and mutual funds, particularly in response to redemption demands.
Despite this pressure, local institutional investors — including banks, insurance companies, and corporate entities — stepped in to absorb much of the selling activity, preventing an even sharper fall in the KSE-100 index. However, the overarching sentiment remained bearish, with market participants closely monitoring the unfolding tensions in the region.
In addition to geopolitical concerns, several key economic developments also shaped market behavior during the week. The government conducted a fixed-rate Pakistan Investment Bonds (PIB) auction, raising Rs299 billion (both competitive and non-competitive bids) against a target of Rs350 billion. Encouragingly, cut-off yields declined by 15–20 basis points, suggesting some optimism in the fixed income segment.
On the external front, foreign exchange reserves held by the State Bank of Pakistan (SBP) rose by $118 million, reaching $10.33 billion as of May 2, 2025. Moreover, the remittance figure for March was released, showing a healthy 13% year-on-year growth with inflows totaling $3.2 billion — a positive sign for the country’s current account stability.
Despite these economic positives, the persistent tensions with India overshadowed investor sentiment. The KSE-100 remained under pressure, reflecting the market’s sensitivity to regional geopolitics.
Trading activity remained strong in volume but negative in tone. The average daily traded volume stood at 508 million shares, while the average daily traded value reached PKR 27.6 billion.
Unless the tensions ease in the coming days, market analysts warn that the KSE-100 may continue to experience further volatility in the short term.