- Summary:
- Karachi Stock Exchange and its benchmark KSE 100 Index have snapped under pressure as the neighbours face off amid Pakistan's ailing economy.
Pakistan’s Karachi Stock Exchange nosedived on Wednesday as investors panicked following India’s overnight attack on the nation. Benchmark KSE 100 Index dropped to five-month lows of 107,007 points in the early hours of trading before recovering some ground to be at 111,449 at the time of writing. The drop put the Index on course to register its second successive monthly loss and increased its year-to-date losses to -3.3%.
India launched missile strikes on Pakistan and Pakistan-administered Kashmir on early on Wednesday, following attacks on tourists visiting Kashmir two weeks ago. Pakistan reported that 26 people had been killed by Indian strikes, with 46 injuries. In addition, it claimed it has shot down five Indian aircraft and a drone.
On the other hand, India reported 8 deaths from Pakistan’s retaliatory shelling. The conflict is flaring up and will likely continue exerting downward pressure on the nuclear-armed economies.
Karachi Stock Exchange has had a good run in the last year, gaining 52% during that period. In addition, it started 2025 on a strong note, rising to record 120,796 points in early February. The performance is a stern contrast from Pakistan’s economy, which has been struggling for the last three years and was rescued from the brink of collapse by IMF financial support.
The State Bank of Pakistan (SBP) cut interest rates by 100 basis points to 11% two days ago in a bid to support the economy amid tariff disruptions. However, the geopolitical pressure emanating from its war with India could prove too strong for the struggling economy and drive the Karachi Stock Exchange lower in the coming weeks.
Karachi Stock Exchange Forecast
The momentum on KSE 100 Index calls for further downside below 112,723 points. The Index will likely find initial support at 114,816. Breaking below that level will signal a strong downward momentum that could go all the way to test 116,602 points.
Conversely, going above 112,723 will usher bullish control, with the first barrier likely to be at 109,933. Breaking above that level will invalidate the downside narrative. Also, such momentum could extend gains to test 108,015 points.
