Pakistan's Equity Market Surges to Global Top Amid Tariff Tensions in India

Strategic Insights -

Pakistan's equity market has led the world in global equity performance in USD terms over the last year, outperforming many regional and emerging markets, including India. The KSE-100 Index delivered a significant 55.5 percent return in US dollar terms and 58.6 percent in Pakistani rupee terms during fiscal year 2024-25 (FY25). This achievement is notable, particularly when considering the two-year cumulative returns, where Pakistan ranked third globally behind Ghana and Slovenia.

Key Takeaways:

  • Pakistan's equity market led globally in USD terms, with a 55.5 percent return in US dollar terms and 58.6 percent in Pakistani rupee terms during FY25.
  • India's equity market faced a downturn in direct response to tariff escalation, marked by sectoral sell-offs, foreign investor pullbacks, and weakened confidence.
  • Pakistan outpaced India's BSE Sensex, which returned just 3.2 percent during FY25, according to AHL data.
  • India trailed behind Pakistan in USD-based equity performance, despite outperforming regional markets like China (+14.8 percent) and India (+6 percent) in terms of returns.
  • Domestic investment and some forward-looking optimism suggest there's still potential for recovery in India's markets.
  • Tariff escalation could slow India's real GDP growth by 0.3-0.6 percentage points, reducing forecasts and potentially leading to job losses, weakened foreign exchange inflows, and dampened investor sentiment.
  • The apparel sector alone could lose around $5 billion over seven months in export revenues due to tariffs.
  • Labor-intensive manufacturing and MSMEs will be especially vulnerable to tariff impacts, potentially leading to job losses and weakened investor sentiment.

Statistics:

  • Pakistan's KSE-100 Index delivered a 55.5 percent return in US dollar terms in FY25.
  • Pakistan's benchmark KSE-100 Index delivered a 58.6 percent return in Pakistani rupee terms in FY25.
  • India's BSE Sensex returned just 3.2 percent during FY25, according to AHL data.
  • The apparel sector alone could lose around $5 billion over seven months in export revenues due to tariffs.
  • India's merchandise trade deficit rose to an eight-month high of $27.35 billion in July 2025.

Sources:

  • Fact-based data from bourse experts
  • AHL data
  • Bloomberg
  • Indian newspapers
  • Moody's Ratings
  • Barclays estimates