Indus Waters Treaty Suspension: Impact on Pakistan Markets Reaction

The Pakistan markets react took a nosedive recently, and it’s got folks on both sides of the border buzzing. India’s decision to suspend the Indus Waters Treaty after the brutal Pahalgam terror attack sent shockwaves through Pakistan’s economy. For us in India, it’s a chance to see how our government’s bold moves ripple across markets.  

Let’s break it down simply, with some solid data, to understand what’s cooking in this tense Indo-Pak drama. 

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Pakistan Markets React

On April 24, 2025, the Pakistan Stock Exchange (PSX) saw its KSE-100 index crash by 2.12%, shedding 2,485.85 points to hit 114,740.29 soon after trading kicked off. This wasn’t just a bad day at the office-India’s suspension of the Indus Waters Treaty, a 1960 deal brokered by the World Bank, was the big trigger.  

The treaty gives Pakistan about 80% of the Indus River system’s water, powering its farms and cities like Karachi. When India hit pause, panic gripped investors, and the Pakistan stock market fell hard.  

Here’s a quick look at the market’s reaction: 

Impact of Indus Waters Treaty Dispute on Pakistan Markets React 

The Indus Waters Treaty is a lifeline for Pakistan’s economy. Agriculture accounts for 21% of its GDP and employs nearly half its workforce. Suspending the treaty threatens crops on 16 million hectares and could dry up water in cities. Investors saw trouble brewing, fearing economic chaos. While the KSE-100 later clawed back slightly, it still closed 1.31% down. 

Indian markets, like the Sensex and Nifty, stayed cool, dipping just 0.3% and 0.26%, respectively, showing our economy’s strength. For Indians, it’s proof that our government’s tough stance can shake things up without rattling our own markets. 

Pahalgam Terror Attack Aftermath: How India’s Move Hit Pakistani Markets 

The Pahalgam terror attack on April 22, 2025, changed the game. Terrorists from The Resistance Front, tied to Lashkar-e-Taiba, killed 28 tourists in Kashmir’s Baisaran meadow.  

India responded with a diplomatic sledgehammer-suspending the treaty, closing the Wagah-Attari border, and scrapping SAARC visa exemptions for Pakistanis. These moves hit Pakistan’s markets like a ton of bricks.  

Major companies felt the heat: 

For us in India, it’s a reminder that our zero-tolerance policy on terrorism packs a punch, even financially, across the border. 

India-Pakistan Tensions Latest: Market Response and Financial Fallout 

Indo-Pak tensions are old news, but the financial fallout this time is stark. Pakistan’s National Security Committee called India’s treaty suspension “water warfare,” promising to fight it through the World Bank. They also suspended the Simla Agreement and banned Indian flights from their airspace.  

But Pakistan’s economy, limping along with a 2.6% GDP growth forecast by the IMF, is in no shape for this. The rupee’s sliding, and power cuts loom since 25% of Pakistan’s grid depends on Indus dams. Meanwhile, Indian markets are buzzing, with FII inflows of Rs 21,263 crore in six days.  

Check out the contrast: 

How Political Conflict Affects South Asian Stock Markets 

Political spats in South Asia often send markets into a tizzy. When leaders throw punches, investors run for cover. The Pakistan stock market reaction to the Indus Waters Treaty suspension by India is a classic example.  

For Indians, it shows how our markets hold steady while Pakistan’s wobble. Want to stay in the loop? Track updates from the Ministry of External Affairs (https://mea.gov.in) or the Press Information Bureau (https://pib.gov.in). 

Key Takeaways 

• The Pakistan stock market fell 2% after India suspended the Indus Waters Treaty post-Pahalgam terror attack. 
• The treaty’s suspension threatens Pakistan’s agriculture and water supply, spooking investors.
• Indian markets stayed steady, showcasing our economic resilience. 
• Political conflicts can tank markets, but India’s stability stands out. 

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