NEW DELHI: Pakistan’s benchmark KSE100 plunged over 3 per cent in Wednesday’s trade after Indian Air Force shot down one of three F-16 jets of Pakistan Air Force (PAF) that had violated Indian air space.
The flareup in tension between India and Pakistan weighed heavy on Pakistani financial markets, with Karachi Stock Exchange’s benchmark KSE10 taking a plunge.
The KSE100 index has plunged 3,025 points, or 7.46 per cent, so far since February 14. On Wednesday, it traded 3.47 per cent lower from previous close at 37,518. India’s BSE Sensex has slipped 205 points, or 0.57 per cent, to 35,828 since February 14. It was down about 50 points at 35,927 on Wednesday.
On a year-to-date basis, both KSE100 and Sensex are down half-a-per cent.
The rise in geopolitical tensions between the two nations has come at a time when the Pakistani economy is in a mess and the nation has been in talks with the International Monetary Fund (IMF), trying to reach a bailout deal with a potential size of $12 billion.
Pakistan’s economic growth this financial year is likely to hit a nine-year low, dipping to almost 2.9 per cent, even as a balance of payment crisis looms and the nation faces cuts in development expenses, monetary tightening and depreciation in the local currency, resulting in a slowdown in domestic consumption and investment.
The Indian economy, on the other hand, has been growing at the fastest rate globally, and is estimated to log 7.3 per cent growth this financial year. India is estimated to reported 6.9 per cent growth in December quarter, compared with 7.1 per cent in July-September.
Fitch Solutions says the south Asian country is under pressure to improve its fiscal consolidation through austerity measures.
Leaders on both sides of the border trades barbs on Wednesday, with Indian Finance Minister Arun Jaitley saying anything is possible now. “If the US can conduct Abbottabad operation, so can India.”
Pakistan, on the other hand, said the Pakistan Air Force action on Wednesday was not a retaliation to continued Indian belligerence.
“Pakistan has taken strikes at non-military target, avoiding human loss and collateral damage. The sole purpose was to demonstrate our right, will and capability for self-defence. We have no intention of escalation, but are fully prepared to do so if forced into that paradigm. That is why we undertook the action with clear warning and in broad daylight,” Pakistan Foreign Minister Shah Mahmood Qureshi said.
On Tuesday, IAF flew deep inside Pakistani territory to destroy terror camps, killing an estimated 300 terrorists.
A host of nations globally has come in India’s support following the deadly terrorist attack on a CRPF convoy in Pulwama on February 14 that killed over 40 personnel. China, a traditional Pakistan ally, has not sided with Islamabad, instead urging both the nations to exercise restraint after Tuesday’s airstrikes by IAF.
The European Union and other major global powers have blamed Pakistan for not taking adequate measures to control international terror. The EU has advised Islamabad to undertake “clear and sustained actions targeting not only all UN-listed transnational terrorist groups but also individuals claiming responsibility for such attacks.”
“India going deeper into Pakistan and striking in Khyber Pakhtunkhwa is really hitting at the heart of the Pakistani pride. The Pakistani Army, especially, would not have liked this to have happened. It had to show some demonstrable action to appease and regain the clout it has in Pakistan. So, this was expected. But if you really closely read the press release by the Pakistan foreign office, it says that their aircraft stayed within the air space of Pakistan and tried to hit a non-military and a non-civilian target,” said Nitin A Gokhale, National Security Analyst.
“I do not understand what a non-military or non-civilian target in India is. Perhaps an empty hillock somewhere or a jungle area where they dropped some payload, some ammunition and that is exactly what they seem to have done because they say we do not want to escalate,” he said.