Stock market extends losses ahead of federal budget presentation

KSE-100 index loses 663.07 points, settles at 72,589.49

KARACHI:

Continuing its downward march, the Pakistan Stock Exchange (PSX) on Tuesday recorded a notable drop of over 650 points, primarily owing to investor fears over potential announcement of tough tax measures in the federal budget for fiscal year 2024-25.

Although the bourse got off to a robust start, when it touched the intra-day high of 73,866.44 points, it failed to maintain the positive momentum.

Bearish activity was fueled by anticipation of subdued economic growth, cautious stance of the State Bank of Pakistan (SBP) in monetary policy and concerns over the unresolved circular debt that swelled to more than Rs5.3 trillion.

The market continued its downturn throughout the day and eventually dipped below the 73,000 mark where it reached the intra-day low of 72,476.05 points. Because of a lack of positive triggers, the KSE-100 index closed near the day’s low with hefty losses.

“Stocks fell sharply on investor fears over likely tough tax measures in the federal budget for FY25,” said Ahsan Mehanti, MD of Arif Habib Corp.

“Subdued economic growth, unveiled later in the Economic Survey, SBP’s cautious policy rate cut and concerns about the unresolved Rs5.3 trillion circular debt crisis played the role of catalysts in bearish close at the PSX.”

At the end of trading, the benchmark KSE-100 index posted a sharp loss of 663.07 points, or 0.91%, and settled at 72,589.49.

Topline Securities, in its commentary, wrote that the PSX witnessed a volatile session as the KSE-100 index opened at 73,866 points, dipped to the low of 72,476 and eventually settled at 72,589, marking a decrease of 0.91%, or 663 points.

The negative trajectory was primarily influenced by companies such as Systems Limited, Meezan Bank, Mari Petroleum, Oil and Gas Development Company and Engro Corporation, which collectively wiped off 280 points from the index, it said, adding that Tuesday’s selling pressure could be attributed to anticipation of announcement of higher taxes in the upcoming budget, scheduled for Wednesday.

Arif Habib Limited (AHL), in its commentary, said “following above-consensus rate cut of 150 basis points, the market extended gains to +0.8% day-on-day before turning lower to close 0.9% down”.

Some 24 shares rose while 68 fell on the KSE-100 index with Systems Limited (-3.12%), Meezan Bank (-2.01%) and Mari Petroleum (-2.35%) being the biggest downside contributors, AHL noted.

JS Global analyst Mubashir Anis Naviwala said the stock market welcomed Monday’s rate cut and opened with a gap of +600 points, but all gains were wiped out in a couple of hours.

“Pressure was seen across the board and notably low investor participation was witnessed,” he said. “We advise investors to exercise caution at these levels and wait for opportunities during market dips,” the analyst added.

Overall trading volumes increased to 372.5 million shares against Monday’s tally of 350.7 million. The value of shares traded during the day was Rs11.65 billion.

Shares of 431 companies were traded. Of these, 107 stocks closed higher, 263 dropped and 61 remained unchanged.

K-Electric was the volume leader with trading in 45.9 million shares, losing Rs0.14 to close at Rs4.50. It was followed by WorldCall Telecom with 33.25 million shares, losing Rs0.05 to close at Rs1.29 and Pervez Ahmed Consultancy Services with 29.03 million shares, losing Rs0.44 to close at Rs1.19. Foreign investors were net sellers of shares worth Rs64.4 million, according to the NCCPL.