After three years of consistent growth, Pakistan’s stock market faced a major downturn in the first quarter of 2026. The KSE-100 Index dropped by approximately 15 percent as investors sold off shares due to ongoing geopolitical instability and market pressure.
This decline ranked the Pakistan Stock Exchange (PSX) as one of the world’s worst-performing markets for the quarter, falling in line with similar slumps in India and Indonesia.
The situation worsened significantly in March, which became one of the toughest months for the market in recent memory.
During that month alone, the index crashed by more than 19,000 points, an 11.5 percent monthly drop finishing at 148,743 points.
The KSE-100 began March at 152,717 points and saw a brief climb to a high of 161,475.
However, intense selling quickly wiped out those gains, pulling the index down to a low of 144,119. This dramatic swing highlighted the extreme volatility and growing anxiety among investors during the month.
PSX slump believed to be a result of Middle East conflict
Market experts believe this slump was caused by several factors, including international conflicts, rising oil prices, and the typical slowdown in trading during Ramzan.
The pressure on stock prices was further intensified as foreign investors pulled their money out of the market and local buyers remained on the sidelines.
Even with some positive economic news such as a current account surplus in February and stable interest rates investors remained fearful. This led to a widespread sell-off that affected almost every major sector of the economy.
Trading activity also took a major hit in March resulting in PSX emerging as one of the world’s worst performing markets.
The average daily volume of shares traded dropped by 37 percent compared to February, while the total dollar value of those trades fell by nearly 30 percent to approximately $99 million. these figures underscore a significant retreat by investors from the market.
