Escalating Tensions Impact Markets Differently

Following the April 22, 2025 terrorist attack in Jammu & Kashmir, tensions between India and Pakistan have escalated, significantly affecting Pakistan's stock markets. The Karachi Stock Exchange's benchmark KSE-100 index recorded a 3.7% decline between April 23 and May 5, with major stocks like "LUCK, ENGROH, UBL, PPL, and FFC" contributing to the drop.

India's Resilience Shines Through

In contrast, India's BSE Sensex has shown remarkable resilience, advancing 1.5% post-attack. Anand Rathi brokerage notes that except during the Parliament attack in 2001, Indian equity markets have not corrected more than 2% during periods of high tension with Pakistan.

Economic Implications and Future Outlook

Credit rating firm Moody's warns that continuous rise in India-Pakistan tensions could negatively impact Pakistan's economic growth and fiscal consolidation efforts. On the other hand, India's robust economic position, bolstered by strong public investment and healthy private consumption, remains protected.

International Investor Confidence

Foreign institutional investors continue to show strong confidence in India, with foreign portfolio investors (FPIs) acquiring shares worth Rs 401.47 billion ($4.8 billion), marking the most sustained purchasing sequence in two years.