Pakistan, May 10 – While war can boost certain industries, it often leads to the decline of others—stock exchanges being particularly susceptible. Following India’s missile tests and drone incursions, it became evident that the market would face significant turbulence. However, it is reassuring to observe that despite Thursday’s dramatic drop, the markets managed to rebound quickly.
On Friday, the Pakistan Stock Exchange (PSX) surged almost 4,000 points, regaining 3.52% by the end of trading. The previous day marked the largest single-day decline ever recorded, with losses amounting to Rs820 billion due to investor concerns over Indian drone attacks on key urban centers. There’s hope that without additional tensions escalating, this might soothe current anxieties among investors. By early Friday, it was evident that the market was showing recovery signals after experiencing a significant 6 percent dip previously. This turnaround indicated renewed investment confidence; however, last Thursday saw panicked sales driven largely by individual traders and mutual funds leading to the sharp downturn. Now though, certain cautious buyers have started stepping back into the fray for what they perceive as underpriced stocks.
Technical analysts have noted that the market has moved into ” oversold” territory, indicating potential for a rebound. According to experts, investors with a long-term perspective ought to utilize these situations effectively.
A significant factor contributing to the recovery is the positive outlook surrounding Pakistan’s agreement with the International Monetary Fund (IMF). It is anticipated that the IMF will release approximately $1 billion as part of this arrangement, with further installments scheduled through an additional funding program. This financial approval has bolstered stakeholder trust and facilitated a market resurgence. Ultimately, praise goes to the Pakistani Armed Forces for effectively countering India’s moves through strategic military actions such as shooting down five or possibly three Indian fighter planes and neutralizing enemy drones, thereby reducing public anxiety. The assurance provided by these defensive capabilities has encouraged investors to return, albeit cautiously optimistic about the future.
The markets could stay volatile, but for now, it appears the worst might have passed – unless conflict erupts once more.