Pakistan Stocks Rebound After India Tensions Shake Market

Pakistan’s benchmark stock index bounced back on Friday, May 9, reversing a four-day decline driven by rising geopolitical tensions with India following a deadly attack in Kashmir.

The Karachi Stock Exchange's KSE-100 index showed signs of stabilization, gaining 857 points, or 0.83 per cent, to reach 103,531 as per Bloomberg data. Early morning trading had seen the index surge by up to 2 per cent before settling lower.

This modest recovery comes after a sharp 6 per cent intraday drop on Thursday, which triggered a market-wide trading halt. Over the past four trading sessions, the index has shed 9.5 per cent of its overall value, reflecting investor unease over escalating military activity in the region.

Tensions escalated after a terror strike in Pahalgam, Kashmir, claimed 26 civilian lives. India, attributing the assault to militants backed from across the border, initiated retaliatory military operations.

In a pre-dawn operation on Wednesday, Indian forces carried out targeted strikes on nine locations in Pakistan and Pakistan-occupied Kashmir. Officials described the actions as "measured" and "non-escalatory," aimed at neutralizing specific threats while avoiding broader conflict.

On Thursday night, Indian defense units intercepted multiple drone and missile attempts from Pakistan aimed at military installations in Jammu and Pathankot. According to official sources, similar incidents were thwarted at over a dozen sites across India’s northern and western frontiers.

Security agencies remained on high alert amid heightened concerns that the situation could spiral into a wider conflict. The exchange of hostilities has significantly rattled investor confidence, contributing to increased volatility in regional financial markets.

While Friday’s gains offered temporary relief, analysts caution that sustained recovery will depend on how the geopolitical situation unfolds. Risk sentiment remains fragile, and traders are closely monitoring developments on both diplomatic and military fronts.