Key Points
- India’s government responds to Pahalgam terror attack with five major actions targeting Pakistan.
- Pakistan’s stock market (KSE-100) plummets over 2,400 points in minutes, reflecting investor panic and regional instability.
- India suspends the Indus Waters Treaty, closes the Attari-Wagah border, cancels Pakistani SAARC visas, and expels Pakistani defense staff.
- The crackdown halts cross-border trade worth nearly ₹3,900 crore, impacting businesses and livelihoods on both sides.
- Indian markets show minor declines, but remain relatively stable compared to the steep fall in Pakistan.
New Delhi: In the wake of the devastating terror attack in Pahalgam, Jammu and Kashmir, which claimed 26 lives, the Indian government has launched a series of decisive measures against Pakistan. These moves, announced after a high-level Cabinet Committee on Security (CCS) meeting chaired by Prime Minister Narendra Modi, have not only heightened diplomatic tensions but also triggered a sharp crash in Pakistan’s financial markets.
India’s Five Major Actions
- Suspension of the Indus Waters Treaty:
India has put the decades-old Indus Waters Treaty on hold, a landmark water-sharing agreement that has survived multiple wars and diplomatic crises. This suspension is set to remain until Pakistan “credibly and irrevocably abjures its support for cross-border terrorism”. - Closure of the Attari-Wagah Border:
The Attari Integrated Check Post, the main land crossing for trade and travel between India and Pakistan, has been shut down with immediate effect. This move halts all cross-border movement, including trade valued at nearly ₹3,900 crore annually. - Expulsion of Pakistani Defense Personnel:
India has declared Pakistani military, naval, and air advisors in New Delhi persona non grata, giving them a week to leave the country. India will also withdraw its own defense attaches from Islamabad, and both sides will reduce their high commission staff from 55 to 30 by May 1. - Cancellation of Pakistani SAARC Visas:
All visa exemptions for Pakistani nationals under the SAARC Visa Exemption Scheme have been revoked. Pakistanis currently in India under this scheme must leave within 48 hours. - High Security Alert:
Indian security forces have been directed to maintain the highest level of vigilance along the borders and within sensitive regions in response to the attack and its aftermath.
Immediate Impact on Pakistan’s Stock Market
The Karachi Stock Exchange (KSE-100) reacted with panic. Within the first five minutes of trading on April 24, the index nosedived by 2,485.85 points over 2% to 114,740.29, reflecting deep investor anxiety over the escalating crisis. The market later recovered some ground but remained sharply lower, with continued volatility throughout the session.
- Key sectors hit included cement, banking, oil & gas, and fertilizers, with several major companies seeing their shares fall 5–10%.
- The crash follows an already fragile economic backdrop, with the IMF recently slashing Pakistan’s GDP growth forecast to 2.6% and Fitch Ratings raising concerns about currency weakness and political instability.
Broader Economic and Diplomatic Fallout
- Trade Disruption: The closure of the border and suspension of trade routes, including those through third countries, will bring bilateral commerce to a complete halt, affecting small traders and industries dependent on cross-border activity.
- Regional Instability: The suspension of the Indus Waters Treaty is seen as a major escalation, with the potential for long-term consequences on water sharing and regional relations.
- Impact on Indian Markets: Indian stock indices (Sensex and Nifty) saw minor declines down about 0.3% but have remained relatively stable, with investors closely monitoring the situation for further escalation.
India’s robust response to the Pahalgam terror attack has not only altered the diplomatic landscape but sent tremors through Pakistan’s financial markets and economy. With both countries on high alert and trade at a standstill, regional tensions remain at a peak, and the world is watching closely for the next moves from New Delhi and Islamabad.
