The sharp plunge followed heightened regional tensions after the United States and Israel launched what they termed “pre-emptive” strikes against targets in Iran, with US President Donald Trump announcing the start of “major combat operations”.
The sharp plunge activated market-wide circuit breakers, forcing a temporary trading halt in the morning to contain the slide. Trading later resumed at 10:22am Pakistan Standard Time (PST).
Heavy selling pressure was observed across key sectors, with investors rushing to reduce exposure amid uncertainty surrounding regional security developments.
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However, following the cooling-off period, the market staged a strong rebound after trading resumed. Bargain hunters stepped in, and institutional support helped restore partial stability, trimming earlier losses. The recovery reflected underlying resilience, though volatility remained elevated throughout the session.
Market analysts attributed the dramatic swings to heightened geopolitical risk premiums, as investors recalibrated positions in response to developments in the Middle East and cross-border tensions affecting regional stability.
“High leverage and overbought conditions triggered panic selling at the Pakistan Stock Exchange,” Topline Securities CEO Mohammed Sohail told The Express Tribune.
Fear of regional tensions led to aggressive selling at the stock market, but the Pakistani rupee and bond yields remained stable, suggesting limited macroeconomic impact so far, he said. He added that with the market trading at a price-to-earnings ratio near 7x, valuations appear compelling, offering attractive entry points for medium- to long-term investors.
“If macroeconomic stability persists, the recent sell-off could ultimately prove to be an overreaction,” the Topline CEO commented.