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Russian (RU) The Pakistan Stock Exchange (PSX) opened sharply lower on Thursday after India imposed a series of tough diplomatic measures on Pakistan, following the Pahalgam terror attack that killed 26 people.
The benchmark KSE-100 index dropped 2.12%, or 2,485.85 points to 114,740.29 within the first five minutes of trading, as investors reacted to the escalating geopolitical tensions.
India’s Ministry of External Affairs announced several decisions, including the suspension of the Indus Waters Treaty and the immediate closure of the Wagah-Attari border. Visa exemptions under the SAARC framework for Pakistani nationals have also been revoked.
This comes a day after the PSX had already ended sharply lower on Wednesday, following the International Monetary Fund’s move to slash Pakistan’s GDP growth forecast to 2.6%.
Adding to the pressure, Fitch Ratings highlighted concerns over the weakening rupee, political instability, and security unrest in Kashmir, all of which have weighed on investor sentiment.
Impact on India
Back home, Indian markets remained largely unaffected in early trade on Thursday, though investors are closely monitoring the situation.
As of 11:37 am IST, the BSE Sensex was down 233 points, or 0.29%, at 79,884, while the Nifty50 declined 69 points, or 0.28%, to 24,259.
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted, “Nifty’s decoupling from the S&P 500 is striking. While the S&P 500 is down 8.4% YTD, the Nifty is up 2.27%. The resilience of the Indian economy, the expected US slowdown, dollar weakness, and continued FII inflows—Rs 21,263 crore in the last six days—have driven this outperformance of India.”
"However, going forward, the market will be concerned about the timing, nature and magnitude of India’s response to the terror attacks and its consequences. Therefore, investors have to be cautious even while remaining invested," he added.
Also Read: Sensex snaps 7-day winning run, sheds over 200 points, Nifty below 24,300
Here are key decisions:
- The Indus Waters Treaty of 1960 will be held in abeyance with immediate effect.
- The Integrated Check Post Attari will be closed with immediate effect. Those with valid endorsements may return through that route before May 1, 2025.
- Pakistani nationals will not be permitted to travel to India under the SAARC Visa Exemption Scheme (SVES) visas. Any SVES visas issued in the past to Pakistani nationals are deemed cancelled. Any Pakistani national currently in India under SVES visa has 48 hours to leave India.
- The Defence/Military, Naval and Air Advisors in the Pakistani High Commission in New Delhi are declared Persona Non Grata. They have a week to leave India. India will be withdrawing its own Defence/Navy/Air Advisors from the Indian High Commission in Islamabad. These posts in the respective High Commissions are deemed annulled. Five support staff of the Service Advisors will also be withdrawn from both High Commissions.
- The overall strength of the High Commissions will be brought down to 30 from the present 55 through further reductions, to be effected by May 1, 2025.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
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