The Pakistan Stock Exchange (PSX) experienced a sharp dip on Thursday and fell by more than 1,000 points following the rapid deterioration of ties between Pakistan and Iran. 

The KSE-100 Index fell below the psychological level of 63,000 points and settled around 62,500 points. 

Investors lost millions due to the decline in the benchmark index, which followed a similar downward trend witnessed at the PSX on Wednesday. 

Read: PSX bearish over geopolitical concerns

In response to Iran’s air strike in Pakistan a day ago, an early morning air attack on terrorist hideouts in Iran’s Siestan-o-Balochistan province was carried out by Pakistan’s armed forces.

The Foreign Office (FO) confirmed that several terrorists were killed during the Intelligence-based operation – codenamed ‘Marg Bar Sarmachar’.

A day earlier, Pakistan recalled its ambassador from Iran and expelled Tehran’s envoy in a swift move to the Iranian missile strikes as extensive consultations were underway to decide the next step.

It was the first time that Pakistan had to recall its envoy from Iran, although the two countries have had troubled relations in the past. This highlights the level of tensions between the two neighbours.

The rapid deterioration in ties was triggered by Iran’s missile and drone strikes inside Pakistan on Tuesday. Iran claimed the strikes were aimed at two ‘terrorist bases’ of Jaish-al Adl, a terrorist group operating from Iran’s Sistan-Baluchistan province.

Pakistan strongly condemned what it called the “unprovoked violation of its airspace” by Iran and warned of serious consequences. Islamabad contested the Iranian claims and said the strikes killed two innocent children and injured three girls.