India-Pakistan conflict: The Pakistan stock market took a significant hit on Wednesday, May 7, as investors reacted to India’s overnight strikes on nine terrorist sites in Pakistan and Pakistan-occupied Kashmir, carried out under ‘Operation Sindoor’.

Pakistan’s main stock market index, the Karachi-100, plunged by 6,272 points or nearly 6 per cent during early trading on Wednesday, hitting a low of 107,296.64 compared to Tuesday’s close of 113,568.51.

Following the brutal terror attack in Pahalgam, the KSE-100 index has declined by 3.7 per cent, whereas the domestic Sensex index has gained approximately 1.5 per cent.

The KSE-100 index of the Pakistan stock market has declined by approximately 4% since the terrorist attack in Jammu & Kashmir on April 22, 2025. The rising tensions between India and Pakistan following the terrorist attack have had a major negative effect on Pakistan’s stock markets.

From April 23 to May 5, the Karachi Stock Exchange’s benchmark KSE-100 index fell by 3.7%, driven by fears of a possible military conflict.

Indian stock market today

Meanwhile, Indian stock market seems to be showing resilience despite the renewed tensions between India and Pakistan.

Although the Sensex initially dropped 692 points to 79,948.80 from its previous close of 80,641.07, it quickly rebounded, gaining over 200 points to reach 80,845.

Market volatility persisted, and by around 10 AM, the Sensex was down just 32 points, or 0.04%, at 80,609. At the same time, the Nifty 50 slipped 19 points, or 0.08%, to 24,361.

“Geopolitical tensions like the ongoing Indo-Pak standoff under Operation Sindoor tend to cause immediate market volatility, as seen with the Nifty and Sensex dropping 0.6–0.8% recently. However, markets have consistently rebounded in the long term. After the Kargil War, the Sensex surged 63% within a year. Post-Parliament Attack, it rose over 20% the following year. Following the Mumbai Attacks, it gained 60% within 12 months, and after Balakot, it climbed 15% by year-end.

While short-term caution is reasonable, history shows that Indian markets demonstrate strong resilience once clarity returns. Unless accompanied by broader economic or global shocks, Indo-Pak tensions have not had a lasting negative impact. Investors should focus on fundamentals, not fear,” said Pankaj Singh, smallcase manager and Founder and Principle Researcher at SmartWealth.ai.

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