Pakistan’s economy is reeling from a brutal hit. On April 24, 2025, the Pakistan Stock Exchange (PSX) took a nosedive, shaken by rising tensions with India after a horrific terror attack in Pahalgam, Jammu and Kashmir. The KSE-100 index crashed, exposing just how fragile Pakistan’s financial stability is right now. Let’s dive into the chaos at the PSX, the economic fallout, and what India did to turn up the heat.
The PSX in Freefall
“We’ll be back soon. PSX website is under maintenance until further notice.” On Wednesday, April 23, 2025 The PSX, a snapshot of Pakistan’s economic pulse, got hammered. The KSE-100 index, which soared 84% in 2024 and was tipped for a 40% jump in 2025, plummeted:
- April 24 Bloodbath: The index tanked 2.12% (2,485.85 points) at the opening bell, as investors scrambled to sell amid India’s retaliation news. By 2 PM IST, it clawed back slightly but was still down 1.31% (1,532.42 points) at 115,693.72.
- Two Days of Pain: This came after a 1,204-point drop on April 23, sparked by grim economic forecasts. Trading volumes crashed 18.31% to 605.17 million shares, with traded value down 9.05% to PKR 27.76 billion.
- Panic Mode: Social media was ablaze with #KSE100 trending, as investors vented their fears. The market’s wild swings showed it’s a sitting duck for shocks, even with 75.8% domestic ownership propping it up.
The Pahalgam Attack: Where It All Began
On April 22, 2025, a brutal terror attack hit Baisaran, near Pahalgam’s postcard-perfect hills, a spot locals call ‘Mini Switzerland.’ The attack, pinned on The Resistance Front (TRF)—a group tied to Pakistan-based Lashkar-e-Taiba—killed 26 people, mostly tourists. It crushed the region’s tourism vibe and lit a fuse under India-Pakistan relations, setting off an economic firestorm for Pakistan.
India Fight backs with Bold Response
India didn’t hold back after the Pahalgam attack. Prime Minister Narendra Modi’s Cabinet Committee on Security (CCS) rolled out tough measures to squeeze Pakistan, calling them “measured but firm”:
- Ditching the Indus Waters Treaty:
- India pulled the plug on the 1960 treaty, cutting off Pakistan’s water lifeline. The government blamed Pakistan’s alleged terror links, calling it a “changed reality” that justified the move.
- Sealing the Attari-Wagah Border:
- The border, a hub for trade and cultural ties, was locked down instantly. Permit holders got a May 1, 2025, deadline to wrap up, strangling cross-border commerce and hitting traders hard.
- Diplomatic Slap:
- India scrapped SAARC visa perks for Pakistanis, curbing travel. It also kicked out Pakistani military advisors from New Delhi and pulled its own from Islamabad, turning the diplomatic screws.
- Ramping Up Pressure:
- India hinted at reviewing other agreements, keeping Pakistan on edge. Extra troops were sent to Jammu and Kashmir, but no direct military strikes were greenlit—yet.
India said these steps were about stopping Pakistan’s failure to rein in terrorism, pointing fingers at the Inter-Services Intelligence (ISI). Pakistan’s Foreign Ministry fired back, calling it India’s attempt to dodge domestic heat with “saber-rattling.”