How the perfect storm hit the stock market and left it in the red

A stock market crash is nothing new or special. The Pakistan stock exchange has actually seen three full blown crises in a span of 10 years from 2000 to 2010. The volatility in the index is something that is to be expected from day to day. It is considered an integral part of the market anyway. However, what happened on the 29th of January 2026 stands out as it was a perfect storm of different events culminating together leading to the index plummeting by more than 6,000 points within a day. It seemed like it was an event waiting to happen and being shocking nonetheless. This is the story of how small events led to the catalyst that was the crash.

The beginning

The story actually begins nearly 3 years ago. It is June of 2023 and the index has been range bound for a long period of time. May 2017 had seen the index touch historic highs of 53,000 since which the market had been steadily falling. The case was not helped by the pandemic taking place which saw the index go as low as 28,500 points. In addition to the market falling, the market also experienced multiple market halts taking place. Market halts are a protective measure that has been put into place in case the market increases or decreases very rapidly. 

Market halts are used all over the world as a way to manage the systematic risks that the market is exposed to by halting trading and index movement for a period of 45 minutes. This acts as a cooling off period in which investors can assess the market before the market starts to trade again. Another benefit of this halt would be that National Clearing Company of Pakistan Limited (NCCPL) would have the opportunity to collect mark to market losses up to the trading halt rather than waiting to collect them at the end of the day.