KARACHI: A worsening security environment and an uncertain economic outlook continued to batter investor confidence on Monday, as the Pakistan Stock Exchange (PSX) came under intense selling pressure.

Panic-driven sell-offs dragged the benchmark KSE-100 index below the 168,000 level, marking the fourth-largest single-session decline in the bourse’s history.

The benchmark plunged 5,479 points, or 3.16 per cent, to close at 167,691. Investors lost Rs631 billion in a single session, taking cumulative losses in market capitalisation to over Rs2.24 trillion since the index’s all-time high on Jan 23. So far this month, unrelenting volatility has erased Rs1.99tr in value.

In absolute terms, the largest-ever single-session fall of 6,683 points was recorded on Feb 19 amid US-Iran tensions and weakening corporate profits following payment of the super tax under a Federal Constitutional Court ruling upholding its legality. The earlier sharpest drop of 6,482 points occurred on May 8, 2025, when India launched attacks on Pakistan.

Equity investors have lost Rs2.24 trillion since January peak

So far this month, the market has shed 17,366.75 points, or 9.38pc, with steep declines of 5,150 points on Feb 16, 6,683 on Feb 19 and 5,479 points on Monday.

An International Monetary Fund (IMF) review mission is due on Feb 25 to assess Pakistan’s performance under the $7bn Extended Fund Facility. Although the Fund has recently acknowledged reforms supporting macroeconomic stabilisation, the absence of positive triggers and renewed militant attacks on security forces, along with Pakistan’s airstrikes inside Afghanistan targeting militant camps, weighed heavily on sentiment.

Topline Securities Chief Executive Mohammed Sohail said the benchmark index had declined more than 11pc from its peak of 189,000, entering correction territory.

“Since June 2023, when the index stood at 40,000, and Pakistan secured IMF support, the market rallied nearly 4.7 times in a historic bull run. During this period, the index corrected by 10pc or more on three occasions (December 2023, May 2025 and now). On earlier occasions, the market recovered as macroeconomic and political stability remained intact,” he said.

“This time too, there is no major macro shock. The sell-off appears driven by above-average foreign outflows, concerns related to Reko Diq, softer corporate earnings and futures contract unwinding. At a forward price-to-earnings ratio of 8, valuations remain attractive. An 11pc fall constitutes a correction, not a bear market,” he added.

Ali Najib, Deputy Head of Trading at Arif Habib Ltd, said the week began on a distinctly negative note, with the session ranking among the steepest declines in PSX history and underscoring fragile investor confidence. The benchmark breached the key psychological threshold of 170,000 on a closing basis, reflecting mounting stress.

Investor sentiment remained subdued amid geopolitical tensions, uncertainty over the IMF review and mixed expectations surrounding the ongoing earnings season.

Major laggards included Lucky Cement, Fauji Fertiliser Company, Engro Holdings, United Bank Ltd, Meezan Bank, Mari Energies, National Bank of Pakistan, Hub Power Company and Pakistan Petroleum Ltd, which collectively shaved 2,837 points off the index.

Data compiled by Topline Securities showed the KSE-100 oscillated between an intraday high of 174,336 and a low of 166,886 points, largely influenced by rollover-week dynamics.

Index-heavy constituents, including Habib Bank Ltd, were among the principal drags, pulling the benchmark down by 1,797 points.

With a bearish market tone, the trading activity weakened as the trading volume fell 14.2pc to 461 million shares. However, the traded value rose 4.81pc to Rs24.8bn. K-Electric led the volumes chart, with around 36 million shares changing hands.

Analysts said the 170,000 level had been decisively breached, with 165,000 emerging as the next key support as investors await clarity on the IMF review and the evolving security situation.

Published in Dawn, February 24th, 2026