The Pakistani stock market has witnessed a dramatic downturn after the country's Defense Minister declared that Pakistan is now openly engaged in a war against Afghanistan. On February 27, the KSE-100 index fell by nearly 2%, attributing substantial losses to increasing geopolitical tensions and military actions between both nations. Initially, the index saw a decrease of over 3000 points, reflecting the immediate panic among investors regarding the potential escalation of the conflict.

As both sides exchanged fire, with Pakistan launching artillery shells into Afghan territory and Afghanistan responding in kind, the stock market faced massive sell-offs. The turmoil not only impacted the Pakistani market, leading to considerable drops in shares of automobile assemblers, cement manufacturers, and commercial banks, but also affected the Indian market. The Sensex recorded a drop of 961 points and Nifty decreased by 317 points, revealing the widespread market reactions to the geopolitical crisis.

Despite a brief recovery later in the day, where the KSE-100 index stabilized closer to a 0.5% decrease, the overall sentiment remains bearish. Investors are apprehensive about the long-term implications of sustained conflict and rising tensions in the region, highlighting a volatile environment for financial markets. The current stock market scenario underscores the interconnectedness of geopolitical dynamics and economic stability amid ongoing conflict.