India strikes Pakistan stocks, KSE100 tumbles 3,300 pts; here's how 

Pakistan stocks took a beating on Wednesday, with their benchmark index KSE100 plunging nearly 3,200 points or 3 per cent in brisk-selloff amid fears India was about to strike the country after the Pahalgam terror attack. 

The selloff comes in the backdrop of comments by Pakistan's Information Minister Attaullah Tarar where he cited “credible intelligence” reports to suggest India was looking to conduct a military action against Pakistan in the next 24 to 36 hours. 

KSE100 fell 3,182.40 points, or 2.77 per cent, to 1,11,689.79. Stocks such as AGP, Nishat Mills, Pakistan International Bulk Terminal Ltd, Pioneer Cement Ltd and Adamjee Insurance Company Ltd tumbled 6-10 per cent in today's trade.

Against this, the domestic stock market as suggested by the BSE Benchmark Sensex was calm, with the index settling the day at 80,242.24, down 46.14 points or 0.06 per cent.  The momentum is being capped by rising tensions between India and Pakistan and muted Q4 results, Vinod Nair, Head of Research at Geojit Investments said.

The Prime Minister Narendra Modi had on Tuesday chaired a meeting with the military brass in New Delhi. Reports suggest he has given armed forces complete operational freedom to decide on the mode, targets and timing of the Indian response. Shares of defence stocks were buzzing in Wednesday's trade, taking their recent gains to yet another session. 

India has taken several steps since including halting trade with Pakistan, expelling Pakistani officials from the High Commission, cancelling visas under the Saarc Visa Exemption Scheme and suspending the Indus Waters Treaty (IWT).

 "India’s decision to suspend the IWT could seriously restrict Pakistan’s water supplies. Pakistan has deemed India’s suspension of the Indus Water Treaty (IWT) an ‘act of war’. India’s decision means that it could, if and when it chooses to, restrict the flow of water from the Indus, Jhelum and Chenab into Pakistan. But it does not mean that India plans to restrict this flow any time soon," said Manoranjan Sharma, Chief Economist, Infomerics Valuation and Ratings. 

Sharma said: "Should India do this, this would hurt Pakistan, where it hurts most because Pakistan is a largely agrarian economy, with agriculture contributing 24  per cent to the country’s GDP and 37.4 per cent to employment. In view thereof, India’s decision could cause an existential crisis for the Pakistani economy, which is already in tatters." 

Pakistan economy

Sharma said Pakistan’s economy is already in an abysmal mess, irrespective of the criteria adopted. In 2025, Pakistan's GDP is projected to be less than even one-tenth of India’s $4.2 billion economy at about $348.72 billion; fiscal deficit is at 7.4 per cengt of GDP, nearly twice the regional average.

"Pakistan's total foreign exchange reserves were precariously placed at $16.04 billion (no way comparable to India's forex reserves of $686.2 billion). In other words, the asymmetry with the Indian economy could not possibly have been more pronounced. What worsens matters is the complete collapse of the credibility of Pakistan at all international fora, starkly revealed in the capture and killing of Osama Bin Laden in Abbottabad, in close proximity to their military headquarters," Sharma said.