The Pakistan stock market plunged over nine per cent in four days of bear hammering as the escalation in India-Pakistan spooked investors across the border.

On Friday, the benchmark KSE-30 Index fell 3% on provisional basis to its the lowest since Dec. 19, after dropping as much as 6.1% at one point. India’s NSE Nifty 50 Index closed 0.1% higher after swinging between gains and losses most of the session. India’s currency fell as much as 0.5% against the dollar in choppy trade.

On Thursday, the benchmark index lost over 6% of its value in intraday deals, sparking a temporary trading halt. In the last four trading sessions, the KSE 100 index lost 9.5% of its value. Meanwhile, since April 22, the day of the Pahalgam terror attack, the index has lost 12.5%.

India launched ‘Operation Sindoor’ targeting terror infrastructure in Pakistan and Pakistan-occupied Kashmir in a strong response to the terror attack in Pahalgam. The April 22 attack, carried out by the terror organisation The Resistance Front, killed 26 civilians.

What should Indian investors do now?

India began “Operation Sindoor” targeting terrorist infrastructure in Pakistan and Pakistan-administered Kashmir. It is a retaliation of Pahalgam attack where 26 Hindus were killed. While the announcement caused the Indian Stock market react strongly.

As obvious the attack gives a boost to the Indian defense companies such Hindustan Aeronautics (HAL), Bharat Electronics (BEL), and Bharat Dynamics—showed an increase. Why? Because conjecture during military operations holds that higher government spending on defence is reflected in the economy

FII plays a vital role in Indian Market and as we know these players usually pull out if the region experiences some pressure or unrest. Due to this a short-term selling pressure can be seen on the Indian equities.

As anxiety rises and capital shifts into safer assets like gold and the US Dollar, gold price goes up as it’s nature whenever world sees unrest and the Indian Rupee fell somewhat.

Amidst geopolitical tensions, India and the United Kingdom officially signed a significant Free Trade Agreement (FTA) on May 6, 2025. This accord aims to increase bilateral trade by £25.5 billion annually by 2040. 90% Tariff Reduction on British Goods including automobiles, whisky, and machinery.

UK based service companies can have more access to Indian Markets making the legal formalities easy for setup which result in more jobs for Indians and the UK is expecting it’s GDP increase by by £4.8 billion yearly. This agreement is anticipated for India to boost exports—particularly in textiles and food goods—and draw more foreign capital

“While the War situation brings uncertainty to the Indian Stock Market the UK-India FTA presents a promising avenue for economic growth. Investors and market participants will closely monitor these developments,” said Ankur Sharma, Market Analyst, VT Markets