How did the Pakistani stock market react to Operation Sindoor

Operation Sindoor triggered a sharp and immediate sell-off in the Pakistani stock market: The KSE-100 index, Pakistan’s primary stock market benchmark, plunged by over 6,200 points-equivalent to a 5.5% drop-in early trading on May 7, 2025, falling to 107,296. This steep decline led to a temporary halt in trading due to the scale of the crash. The sell-off was driven by heightened fears of further military escalation, investor panic, and concerns about Pakistan’s economic stability amid rising geopolitical risks. Key sectors such as banking, energy, and infrastructure suffered significant losses, reflecting widespread risk aversion and capital flight. The market’s fragility was exacerbated by Pakistan’s broader economic challenges, including high inflation, dependency on IMF support, and thin trading volumes that allowed for rapid foreign investor exits. The KSE-100’s drop since the Pahalgam terror attack totaled nearly 10,000 points, highlighting persistent investor anxiety even before the operation. In contrast, Indian markets demonstrated resilience, quickly recovering from initial volatility and underscoring the diverging perceptions of economic and geopolitical risk between the two countries.