PSX claws back massive losses to end flat amid budget doubts

KARACHI: The Pakistan Stock Exchange (PSX) on Friday lost near 2,000 points at one point in the day owing to panic-selling over budget and economic uncertainties, but later clawed back massive early losses on bargain hunting to end on a dull note. 

The benchmark KSE-100 Shares Index lost 108 points or 0.15% to close at 73,754.01. The KSE-100 declined by 2.8% week-on-week.

During the intraday trade, the apex index fell to 73,206.74 points, down by 656.19 points or 0.89% from the yesterday's close of 73,862.93 points. 

At one point around 10am, the stocks plunged by over 1,900 points and hit 71,961 points. 

Topline Securities in its market wrap noted it was a volatile session at the exchange.

"The index suffered a significant decline, reaching an intraday low of -2,081 points, largely due to rumours that capital gains and dividend tax rates might be increased in the budget for FY25 to match standard personal or corporate income tax rates.

“However, as the day progressed better sense prevailed as investors came in to accumulate shares given monetary policy meeting on Monday where market expect cut in policy rate by 100-200 basis points and the fact increase in tax on capital market is a rumour at this point in time,” it said. 

MEBL, PPL, HBL, MCB, OGDC, and UBL knocked 302 points out of the index. 

“This decline can be attributed to investors` concern with respect to expected austerity and additional taxation measures by the government in the upcoming budget for FY25,” the Topline report added.

Speaking to Geo.tv, Arif Habib Limited (AHL) Head of Research Tahir Abbas said that the market sentiment is negative amid news flow suggesting increase in capital gains tax on equities alongside higher taxation on dividend income in the upcoming budget.

"The investors rushed to sell their positions before the budget which caused panic in the market," he added. 

A day earlier, the benchmark index decline by 356.51 points or 0.48% due to concerns about higher taxes in the impending FY25 budget and economic uncertainties.

Analyst Ahsan Mehanti at Arif Habib Corp said: “Stocks closed lower on concerns for economic uncertainty. Investor expectations for cautious SBP policy and subdued growth impacted the sentiments.”

Reports of likely harsh conditions in the new International Monetary Fund (IMF) programme for raising power tariffs, tax measures in the Federal Budget FY25 played a catalyst role in the bearish close.