KARACHI (HRNW): The Pakistan Stock Exchange (PSX) has witnessed a period of extreme volatility and a sharp downward trend over the past three weeks, leaving investors in a state of deep uncertainty. The benchmark KSE-100 index plunged by 1,432.54 points (0.85%) in its most recent session on Tuesday, February 24, 2026, closing at 166,258.54 points. This marks a staggering decline from the index’s peak of 184,441 points on February 1, representing a nearly 10% contraction in just twenty-four days and wiping out over PKR 2.4 trillion in market capitalization.
Market analysts describe the current situation as a “corrective phase” driven by a lack of positive catalysts and significant policy shocks. Key factors contributing to the bearish sentiment include the State Bank of Pakistan’s decision to maintain high interest rates at 10.5%, which defied market expectations for a cut, and heightened geopolitical tensions involving regional stability. Furthermore, foreign investment has taken a severe hit, with Foreign Direct Investment (FDI) plunging by 43% during the first half of the current fiscal year (FY26), as international investors remain cautious due to regional security concerns and domestic macroeconomic adjustments.
Beyond the stock market, the broader economy shows signs of strain as exports remain sluggish and the current account deficit widens. While the government has pointed to rising foreign exchange reserves and a controlled inflation rate of 5.8% as signs of stabilization, critics argue that these are temporary metrics that do not reflect sustainable structural growth. Experts warn that for a durable recovery, the government must move beyond “cosmetic measures” and implement long-term, investment-friendly policies that can restore both domestic and international investor confidence in Pakistan’s economic trajectory.
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