Bourse witnessed extreme volatility on Wednesday when geopolitical tensions with India triggered a panic sale in early trade and sent benchmark KSE-100 index by over 6%.

However, the market succeeded in recovering a significant part of the losses at noon, bent by investor optimism over the upcoming International Monetary Fund (IMF) Board meeting.

Pakistan Stock Exchange’s (PSX) Benchmark KSE -100 -Index fell down to an intradag -lav at 107,007.68, a fall of 6,560.82 points or -5.78%from the previous end of 113,568.50. At his session high, rebound kse -100 to 112,457.37 points, still down 1,111.13 points or -0.98%.

“Pakistan Stock Exchange, after falling sharply by 6% at open, has recovered and is down by 1% now. Many people believe that after this there will be no major escalation between the two neighbors and dust will eventually settle down,” said Mohammed Sohail, CEO of Topline Securities.

“Investors seem optimistic about the upcoming IMF board meeting that will decide loan tranches for Pakistan,” he added.

The sharp early decline followed military strikes of India that targeted areas of Punjab and Azad Kashmir. In response, Pakistan’s armed forces launched retaliation operations, dropped five Indian Air Force Rays, including three Rafales, an SU-30MKI and a MIG-29, as well as a combat drone.

Pakistan also targeted and destroyed Indian Brigade Headquarters and several positions along the line with control (LOC), according to Inter-Services Public Relations (ISPR) Director-General LT Gen Ahmed Sharif Chaudhry.

DG ISPR confirmed that all Pakistani jets involved in the engagement returned safely. Meanwhile, 26 Pakistani civilian martyrs and 46 others were wounded in the Indian missile attacks, according to the military’s statement.

India claimed that its offensive was retaliation for the recent deaths of over two dozen tourists in Indian illegally occupied Jammu and Kashmir (IIOJK), an incident that it is blamed for Pakistan – an accused Islamabad has heavily denied.

Despite the increased military tensions, the market mood seemed to stabilize over optimism at the IMF’s executive meeting scheduled for May 9 to consider a $ 1.3 billion agreement under the extended fund facility (EFF).

The agenda includes Pakistan’s request for a change of performance criteria and an arrangement under resilience and sustainability facility (RSF).

The IMF and Islamabad had reached the staff level agreement in March during the first review of the ongoing 28-month Bailout program of $ 7 billion. If approved, the latest tranche would bring total payments under the program to approx. 2 billion dollars.

Tuesday, before the escalation, the KSE-100 index was already closed lower by 0.47% at 113,568.50 points.