A dramatic day at the Pakistan Stock Exchange (PSX) eventually saw the benchmark KSE-100 Index close marginally negative, but not before it had lost over 2,000 points in the early minutes of trading on Friday.
The KSE-100 started the trading session with its biggest fall in months, plunging below the 72,000 level as investors offloaded shares over rumours of high taxes being imposed on the capital markets in the upcoming budget.
The index had already been under pressure this week, losing ground in every session, but Friday’s selling spree was an outright ‘dump approach’ that was triggered by rumours of higher taxes and anti-growth proposals in the upcoming budget that is set to be announced on June 12.
However, participants soon began to cherry-pick over a greater likelihood of a rate cut in the monetary policy announcement on June 10. Gradually, the market recovered with the index clawing back over 73,000, and only closed marginally in the red.
At close, the benchmark index settled at 73,754.02, down by just 108.91 points or 0.15%. It had earlier hit an intra-day low of 71,781.96.
Experts said concerns regarding proposals in the upcoming budget 2024-2025 drove the selling spree early on in the session.
“A proposed increase in the Capital Gains Tax (CGT) and dividend tax in the upcoming budget drove this trend,” said Sana Tawfik, head of research at brokerage house Arif Habib Limited.
“There are also talks of imposition of GST or increasing PDL on petroleum products,” she added.
The analyst, however, was of the opinion that the expected decline in the key policy rate in the upcoming Monetary Policy Committee (MPC) would turn fortunes around.
“We expect policy rate to decline by 200bps.
“A global reversal of policy rate has been initiated, with the ECB and Bank of Canada announcing rate cut. This will support the State Bank of Pakistan’s decision.”
Regardless of the expectation, selling pressure was witnessed among key sectors on Friday.
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