Pakistan Stock Market Crash: Worst Fall on Record

Key Highlights:

• The KSE-30 Index plummeted 9.6% at the open on March 2, sparking a 45-minute trading halt due to escalating tensions in the Middle East and Afghanistan.
• The index lost almost 5,000 points to hit a day's low of 46,351.64 in intraday deals, marking the worst fall on record for Pakistan's stock market.

Market Reaction:

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• The decline coincided with steep losses in global equities, with Asian shares dropping 1.3% and US equity-index futures falling 0.6%.
• Indian stock markets were down around 1.5% in the afternoon session, while Europe saw EURO STOXX 50 futures decline 1.3% and DAX futures slide 1.4%.

Underlying Factors:

• The conflict in the Middle East and Pakistan's border with Afghanistan are the primary drivers of the market crash.
• Pro-Iran protests have spread across the country, while Pakistan has seen cross-border strikes with Afghanistan, resulting in hundreds of deaths.

Technical Analysis:

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• According to Anshul Jain, Head of Research at Lakshmishree, the KSE-30 Index is showing extreme technical weakness, with the velocity of the fall signaling distribution rather than a routine correction.
• The next critical downside magnet sits near the 20-month moving average around 41,000, which may offer interim stabilization. However, if broader risk aversion persists, the path opens toward the 50-month moving average near 33,000.