PSX plunges over 4,700 points amid broad-based selling, Middle East tensions

KARACHI: Pakistan’s stocks fell sharply on Monday, with the benchmark index plunging more than 4,700 points in early trade before paring some losses, as investors dumped shares amid rising geopolitical tensions and broad-based selling, traders said.

The benchmark KSE-100 index at the Pakistan Stock Exchange witnessed heavy volatility throughout the session, reflecting fragile investor sentiment at the start of the week.

Analysts said the sell-off was largely driven by escalating tensions in the Middle East, which have rattled global financial markets and pushed oil prices higher, fuelling concerns about inflation and external account pressures in Pakistan.

Market participants reported widespread selling across key sectors, including banking, cement, energy and fertiliser stocks, indicating a broad-based retreat rather than sector-specific weakness.

The sharp decline follows a series of turbulent sessions at the PSX, where heightened geopolitical risks have repeatedly triggered panic selling and steep losses in recent weeks. Earlier this month, the market saw some of its largest-ever single-day declines, including a drop of over 11,000 points amid war-related concerns.

Investor confidence has been particularly sensitive to developments linked to the ongoing regional conflict involving Iran and its spillover risks for global energy markets. Analysts say rising oil prices — often described as a “war premium” — are weighing on macroeconomic stability and increasing uncertainty for equities.

The latest plunge also comes after intermittent recoveries in the market, highlighting continued volatility. In recent sessions, the index has swung sharply between gains and losses as investors react to shifting global cues and domestic economic signals.

Trading activity has at times been disrupted by market halts triggered by steep intraday declines, as per PSX regulations designed to curb panic selling.

The Pakistan Stock Exchange, formed in 2016 after the merger of regional bourses, has been among the better-performing markets in recent years, but 2026 has seen heightened volatility due to external shocks and geopolitical uncertainty.

Market experts said near-term direction would likely remain tied to geopolitical developments and global commodity trends, with investors expected to remain cautious until clearer signals emerge.