The Pakistan Stock Exchange witnessed a steep crash on Wednesday, May 7, 2025, as markets reacted sharply to India’s overnight military strikes codenamed Operation Sindoor on terrorist hideouts in Pakistan and Pakistan-occupied Kashmir (PoK). The Karachi Stock Exchange 100 (KSE-100) index plunged by 6,272 points (5.5%), falling to 107,296.64, down from 113,568.51 at Tuesday’s close.

Since the brutal Pahalgam terror attack on April 22, which killed 26 civilians, the KSE-100 has dropped 3.7%, while India's Sensex index has risen by 1.5%, reflecting contrasting investor sentiment amid escalating cross-border tensions. India’s Operation Sindoor, launched in the early hours of May 7, was a coordinated strike by the Indian Army, Navy, and Air Force, targeting nine terrorist infrastructure sites four in Pakistan and five in PoK. The strikes were in direct response to the Pahalgam attack and aimed at neutralizing strategic positions reportedly used by terror outfits to plan the attack.

According to Indian defence sources, the precision airstrikes specifically targeted terror networks including Jaish-e-Mohammed (JeM), Lashkar-e-Taiba (LeT), and Hizbul Mujahideen (HM). The strikes, launched at 1:44 AM, destroyed identified locations based on actionable intelligence. In retaliation, Pakistan violated the ceasefire along the Line of Control (LoC), initiating heavy artillery fire in the Bhimber Gali sector of Jammu and Kashmir. Indian Army officials confirmed a calibrated response is underway.

The Indian government has also taken a series of non-military punitive measures following the Pahalgam attack: suspension of the Indus Waters Treaty, revocation of all visas issued to Pakistani nationals, and declaring several Pakistani officials in the Indian High Commission as persona non grata. Coinciding with these developments, India is conducting civil defence mock drills across 244 districts, simulating high-alert scenarios including air raid sirens, evacuations, blackout drills, and camouflage protocols, reflecting growing concerns over national preparedness amid the evolving conflict.