KARACHI/MUMBAI -  Pakistani and Indian stock markets fell on Thursday after news of a border skirmish between Indian and Pakistani forces surfaced on the media.

Pakistan Stock Exchange witnessed range bound activity yesterday as the market lost intra-day gains of over 500 points to close marginally in the negative zone. The 100-share index, after hitting an intra-day high of 40,861 points, closed down by 59.50 points or 0.15% at 40,295.52 points.

Across the border, Indian stock markets slumped almost two percent after the army said it had conducted "surgical strikes" along the de-facto border with archrival Pakistan in Kashmir.  The Bombay Stock Exchange slid 534.70 points, or 1.84 percent, to 27,770.32 in afternoon trade after India said it had carried out the strikes to thwart attacks on some of its biggest cities. India's National Stock Exchange slid 1.75 percent, or 152 points, to 8,592.25. At PSX, gains seen at the start of the session reversed once news of rising tension between the two neighbors gained traction, stimulating skeptics to liquidate their positions. Despite war concerns, rally in the oil sector was witnessed as global crude oil prices jumped overnight post OPEC members’ surprising decision to curtail production. Oil continued to trade comfortably above $46.50/barrel mark after the decision, helping heavyweight exploration firms such as OGDC (up 2.04%), PPL (2.88%) and POL (4.34%) close in the green zone. On the other hand, key decliners during the day were UBL (down 1.26%), SEARL (slipped 3.62%) and ENGRO (slump 1.20%) due to the aforementioned reason, observed analyst Ahmed Saeed Khan. Volumes increased by staggering 63% to 712m shares while value increased by 57.3% to Rs21.4b/$205m.  Volumes were led by BOP and PACE with 59m shares and PACE with 56m shares traded.

Global crude rallied after reports that OPEC reached deal to limit oil production. This led PPL, POL and OGDC to gain between 1.8%-4.7%. Pace announced consolidated EPS of 0.82/share. As a result stock closed at its upper limit by gaining 9.1%, brokers said.

"Panic gripped investors over the uncertain conditions on the Indian border and they pulled out from the market," said Azam Khan, chief executive officer of Sunrise Capital Private Limited.