On April 24, 2025, Pakistan’s stock market faced a severe downturn as the benchmark Karachi-100 index plunged over 2,500 points following India’s suspension of the Indus Waters Treaty, citing the deadly Pahalgam attack that killed 26 tourists. The Pakistan Stock Exchange (PSX), based in Karachi, Sindh, saw rapid investor sell-off amid escalating geopolitical tensions.
The Pakistan Stock Exchange (PSX), headquartered in Karachi and serving as the country’s premier financial marketplace, opened to a sharp selloff as investors reacted strongly to India’s diplomatic measures against Pakistan. The steep decline in the stock market came just hours after India announced the suspension of the Indus Waters Treaty in retaliation to the deadly terror attack in Pahalgam, Jammu & Kashmir, which resulted in the loss of 26 lives.
The benchmark Karachi-100 index (KSE-100) dropped by more than 2,500 points to 114,740.29 within the first five minutes of trading, reflecting a fall of over 2 percent. Market participants cited growing geopolitical uncertainty, fears of escalation, and concerns over regional instability as primary drivers behind the panic-driven trading.
The Indus Waters Treaty, signed in 1960 between India and Pakistan, governs the sharing of river waters. India’s decision to suspend it marks a major diplomatic move, viewed as a significant signal of worsening ties between the nuclear-armed neighbors. The suspension came in the aftermath of the Pahalgam attack, which targeted a tourist convoy, killing 26 civilians and injuring several others.
Traders in Pakistan were alarmed by the speed and severity of India’s response, leading to a mass sell-off across banking, energy, and industrial stocks. Analysts warned of further volatility in the coming days as investors await the Pakistani government’s diplomatic and economic response.
“This is one of the sharpest single-day drops we’ve seen in recent years, triggered purely by political risk,” said Ahmed Bilal, a Karachi-based financial analyst. “Unless there is a swift de-escalation, the market may remain highly unstable.”
As of the close of trading, the PSX had issued no formal statement, while government officials urged calm and assured citizens that steps were being taken to address the evolving situation.
