The market trend is often considered to be an indicator of the state of the economy. Just over two months ago, Pakistan’s stock market was in crisis. On May 7, the Karachi bourse was shaken to its core after India launched Operation Sindoor. It was a cross-border surgical strike by the Indian military forces in response to the deadly terror attack in Pahalgam (Jammu & Kashmir) which took the lives of 26 people.
As news of the strike hit headlines, panic gripped investors. When trading opened on May 7, the KSE-100 Index plunged nearly 6% at the open after the strike was conducted, triggering a trading halt. Fear of war, coupled with Pakistan’s already fragile macroeconomic backdrop with a depreciating currency, high inflation, and a heavy reliance on IMF bailouts, set the stage for one of the most turbulent sessions in PSX history.
In simple terms, Operation Sindoor amplified investor apprehension several notches higher. The currency weakened sharply, inflationary concerns surged, and risk premiums shot up.
KSE 100 Index: Bloodbath on May 7
The mood changed abruptly on May 7, when India launched Operation Sindoor. The KSE-100 index plunged by over 6,500 points, nearly 6% within minutes of opening, forcing the exchange to activate its circuit breakers. The strikes which were the retaliation for a deadly terrorist attack in Pahalgam were the tipping point after weeks of tension and rumors of escalation.
The sell-off was not sector-specific. Banks, energy companies, manufacturers, almost every major listed company saw its shares dumped in a disorderly rush for the exits. Foreign investors, whose participation had been propping up valuations, led the exodus.
KSE after two months – Where things stands now
Fast forward to July 23, and the return scenario has seen a signficant change. The KSE-100 is now trading close to 139,838. It is currently near its all-time high of 140,585.39 set earlier this month. From the May 7 lows, the index has surged nearly 27%.
On a year-to-date basis, the KSE-100 has gained around 21%, and over the past 12 months, it has delivered a 77% return. The 52-week low stands at 76,943.24 .
Performance of Pakistan Stock Exchange before Operation Sindoor
Before Operation Sindoor, the PSX was on a historic rally. In 2024, the KSE-100 delivered an 84.35% annual gain. By early 2025, the index touched highs of 135,000 to 138,000.
Prior to the military tensions, the KSE-100 index had soared from its post-pandemic lows. This was majorly driven by the corporate earnings, easing inflation, and improved macroeconomic indicators.
By the end of 2024, the index had closed at 115,127 points, a 84.35% gain over the calendar year. The bullish momentum carried into 2025, with the KSE-100 approaching all-time highs of 135,000 to 138,000 points by late April. All eyes are now on how the current rally pans out.