Pakistan chickened out on Khalistan support the last time fearing Indian support for Sindhudesh and possibility of Indian invasion.
The Sindh movement did not play much role in it, as far as my own assessment is concerned. In a meeting, Benazir Bhutto did ask Hamid Gul not to play Sikh cards any more as Indians were playing quite effectively the Sindh card in return. But Gul replied to her that keeping Indian Punjab destabilized is equivalent to the Pakistani army to have two divisions at free of cost. (Source: Kaoboys of Raw; Down memory lane by B Raman) And Bhutto agreed with Gul.
The diminishing of Khalistani zeal can be attributed to five vital factors.
1. Assassination of Indira Gandhi: After her assassination, few Sikhs exhilarated so vulgarly and loudly in front of Indian embassy, that it caught the eyes of the MI5 and MI6, later on the Thatcher government started to cooperate with IB and RaW so heavily that it helped to gather sound details about the terrorists whereabouts in an unprecedented manner.
2. Kanishka bombing:After this tragic incident where a number of Canadian nationals lost their lives, intel agencies in Canada too played important role to collect vital informations.
3.Operation Black Thunder: In 1988, similar situation arose when a number of terrorists again took shelter inside Akal Takht. But Rajiv Gandhi did not repeat her mother's fatal mistakes. The brilliant Gill virtually sealed off the entire area for seven days making a perfect seize operation and cleverly kept the media ready. After seven days, when the terrorists were forced to come out, TV cameras showed the entire world that the 'soldiers of religion' had defecated everywhere the holy place. If op-blue star turned the sikhs away from India, Op-Black thunder opened their eyes.
4. The election of 1992 in US: After this election the Jewish community kept on pressing the senior Bush Government to force Pakistan to stop meddling in Punjab. It was the result of this pressure after which lal Singh, Talwinder Singh Parmer and Sohan Singh (top brass leaders of the movement) were told to leave Pakistani territory.
5. The encounter of Sukhdev Singh Babbar: The encounter of this head of Babbar Khalsa which was made in front of public revealed that, Babbar who used to inflict locals with strict code of moral conduct was travelling with a prostitute and had a mini bar inside his car.
So, international pressure, intel cooperation, India's quick lesson from its own faults and the moral corruption of Khalistani leaders collectively resulted in ending this featherbrained movement.