Karachi, February 21, 2026 – The Pakistan Stock Exchange (PSX) witnessed a brutal week as the benchmark KSE-100 index plunged approximately 16,000 points, closing at 173,170, down 8.5% from its January peak of 189,167.
Analysts at Arif Habib Limited attributed the sharp sell-off to persistent market selling, geopolitical risks, and investor caution, marking one of the steepest weekly declines in recent years.
During the week, the KSE-100 index saw a 3.6% week-on-week drop, reflecting bearish momentum across key sectors. Market experts noted that despite stable macroeconomic indicators, continued geopolitical uncertainties weighed heavily on investor sentiment.
On the macroeconomic front, Pakistan posted a trade deficit of USD 2.76 billion in January 2026, while exports increased 3.5% YoY to USD 3.1 billion and imports decreased 1.0% YoY to USD 5.8 billion. The current account recorded a modest surplus of USD 121 million for the month, improving from a deficit of USD 393 million in January 2025.
Other economic indicators showed mixed trends: auto financing surged 35.8% YoY to PKR 328 billion, power generation rose 12% YoY, and the SBP’s foreign exchange reserves stood at USD 16.2 billion. The Pakistani rupee remained largely stable, closing at PKR 279.56 against the US dollar.
Market outlook depends heavily on geopolitical developments and corporate earnings during the ongoing results season. The upcoming IMF visit next week may also influence investor sentiment. Currently, the KSE-100 index trades at a PE of 8.7x with an attractive dividend yield of approximately 5.6%, suggesting potential for cautious upside if conditions stabilize.
Investors are advised to monitor developments closely, particularly international and domestic factors impacting market liquidity and corporate performance.