Navigating Market Volatility: Lessons From The Recent 8,000-Point Drop

You might have heard that recently, in a single day, the stock market of Pakistan witnessed a drop of 8000 points. The KSE-100 index went down by more than 8%

This might have shaken your confidence as an investor. Also, it raises various concerns about where global markets might be headed next.

Rishi invested ₹20 lakh in stocks. Suddenly, the market dropped by 8%. Now, the value of Rishi's investment is ₹18.4 lakh. That’s a straight loss of ₹1,60,000 in just one session.

Being an investor you might have learnt a lot of lessons during recent point drops. Let's have a look at what triggered this fall and what this taught us.

What Happened: A Quick Overview

Recently, we have seen one of the worst single-day performances in Pakistan’s market history. On 28 March 2025, the market dropped over 8,000 points.

It brought back memories of global meltdowns such as in 2008 and early 2020.

Main reasons for the crash:

What Is the Volatility Index And Why Does It Matters?

The Volatility Index (VIX) helps you in tracking how uncertain or risky you believe the market is. The higher the number, the more unpredictable the near future looks.

Levels of VIX and what they usually indicate:

Let’s look at the movement of VIX before and after the market crash:

A 58% rise in the VIX within four days shows how quickly the mood shifted from stable to fearful.

Lesson 1: Selling in Panic Often Leads to Bigger Losses

When you see the market falling sharply, you might rush to sell your stocks. You might be locking in losses by doing so. Holding stocks at such times can bring out great results.

Riya invested ₹8 lakh in equity mutual funds. After a 10% drop, the value of her investment fell to ₹7.2 lakh. Riya had little knowledge and experience in investing, so she panicked and exited the market. 

Four weeks later, the market bounced back by 14%. If Riya had stayed, her portfolio would have been valued at ₹8.32 lakh. However, she sold in panic and suffered a loss.

Lesson 2: Diversifying Your Investments Can Protect You

One of the easiest ways to protect your savings is to diversify them across various investments. This will ensure that if one asset falls, others may balance the loss.

In March 2025, the return from different assets is shown below:

You can see why it is essential to keep a balanced mix. Debt funds and gold stayed positive even when the stock market was falling.

Lesson 3: Don’t Follow Every Headline

We all have seen news using heavy words such as ‘meltdown’ or ‘bloodbath’ during crashes. You should not make any decisions based on these headlines. 

You need to check the real data. Focus on the affected sectors, ways earnings are changing, and available long-term opportunities.

Performance of various sectors in the recent crash:

From the table mentioned-above, you can see that the defensive sector such as FMCG and Energy stayed relatively stable. Also, they tend to hold better during tough times.

Lesson 4: Keep Your Investment Goals Clear

Your every investment should have a goal. It can be anything like buying a house or saving for education. When your goals are clear, it is easier to stay calm during ups and downs in the market.

If you will match your investment with your goal timeline, then it will be very helpful for you:

• Emergency Fund, 6 months of expenses (can be converted into quick cash)
• Short-Term, safer options like fixed deposits or short-term debt funds
• Long-Term, equity funds, index investing, balanced funds, and stocks

Lesson 5: Opportunities Come During Crashes

Many good companies trade at lower prices when the market crashes. If the business of the company will remain strong then its stocks will become valuable in the long-term.

During a crash, the stock price of XYZ company dropped from ₹1,200 to ₹1,000. Garima knows that its real worth is still ₹1,300. She grabbed this good buying opportunity at a 23% discount.

Before making any move, tracking valuations such as price-to-earnings ratio, earnings history, and future growth expectations will help you.

Final Thoughts

Big crashes in the market are a reminder that it doesn't move in a straight line. It passes through phases of growth and correction.

Being a smart investor you must stay calm, keep investing as per your plan, and avoid emotional decisions.

Instead of fearing volatility, you should treat it as a test of patience and discipline. Over the long run, staying invested through ups and downs often pays off.

FAQs

1. Does an increase in the volatility index mean I should stop investing?

Not always. It just shows more movement in price. You must keep reviewing it and stay focused on your plan.

2. What is a safe way for me to invest every month? Even when the market situation is uncertain?

If you invest fixed amounts constantly, like monthly plans, then such plans can help you in managing price ups and downs.

3. Can I invest even when the market is falling?

Yes, when the market is falling it can offer you good chances to purchase stocks of strong companies at lower prices. 

4. How should I protect my money during market swings?

You must spread your investment across various assets such as debt, gold, and stocks to decrease risk.

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LoansJagat Team

We are a team of writers, editors, and proofreaders with 15+ years of experience in the finance field. We are your personal finance gurus! But, we will explain everything in simplified language. Our aim is to make personal and business finance easier for you. While we help you upgrade your financial knowledge, why don't you read some of our blogs?