Karachi, May 8, 2025 – The Pakistan Stock Exchange (PSX) experienced a dramatic crash of 6.32% during midday trading on Thursday following reports that India launched a series of drone strikes across multiple Pakistani cities overnight. The news triggered widespread panic among investors, resulting in the PSX hitting its lower lock and forcing a temporary suspension of trading.
As of 12:37 PM, the benchmark KSE-100 index was trading at 103,060 points, down 6,949 points from the previous day’s close of 110,009. The steep decline marks one of the most significant single-day losses in recent months and reflects the deepening geopolitical instability in the region.
Earlier in the session, the PSX had shown signs of recovery with a surprising surge of 1,900 points, as some investors speculated that tensions might ease. However, optimism quickly evaporated once credible media reports confirmed the Indian drone strikes. These strikes were carried out under India’s so-called ‘Operation Sindoor’, allegedly in retaliation for an incident in Pahalgam, located in Indian Illegally Occupied Jammu and Kashmir (IIOJK), where an attack on tourists took place.
Islamabad has strongly rejected India’s accusations and labelled the strikes as “unprovoked aggression.” Pakistani authorities confirmed the martyrdom of at least 31 civilians and stated that the Pakistan Air Force had shot down five Indian jets along with several unmanned drones in response.
The heightened conflict has significantly impacted market confidence, leading to a rapid sell-off. Trading floors across the PSX witnessed heightened volatility as institutional and retail investors alike rushed to offload holdings, fearing further instability.
Adding to the uncertainty is the upcoming IMF Executive Board meeting scheduled for May 9. Investors are closely monitoring developments as Pakistan awaits approval of a crucial $1.3 billion tranche under the Extended Fund Facility (EFF). The meeting will also consider the country’s request for performance criteria adjustments and additional funding under the Resilience and Sustainability Facility (RSF), which could raise total disbursements to nearly $2 billion.
On Tuesday, the KSE-100 had already dropped 3.13%, or 3,559 points, due to growing concerns over regional conflict. With geopolitical risks and economic pressures mounting, the outlook for the PSX remains highly uncertain as trading resumes later in the week.