KARACHI: The bearish spell on the stock market entered its fifth day on Friday. A power tariff hike and expected harsh taxation measures in the upcoming budget amid a cautionary monetary policy approach took investors on a roller-coaster ride, pulling the benchmark KSE 100 index below 72,000 in early trading.

Ahsan Mehanti of Arif Habib Corporation attributed the market downturn to investor concerns about the surging power tariff impacting industrial earnings and Moody’s Ratings projections that Pakistan will draw on its foreign exchange reserves for debt repayments, raising near-term default risk high.

He said cautious activity ahead of the SBP monetary policy announcement on June 10 and uncertainty over tax measures on the capital market in the FY25 budget to seek a $8bn IMF loan under the Extended Fund Facility contributed to the bearish close.

Topline Securities Ltd said the market reacted to rumours that the CGT and dividend tax rate might be increased to match standard personal or corporate income tax rates in the budget 2024-25, with the maximum personal income tax slab rising to the highest 45pc.

However, as the day progressed, better sense prevailed as investors came in to accumulate shares in anticipation of a 100-200 basis point cut in the SBP monetary policy committee meeting on Monday.

Topline Securities obs­e­r­ved that the rumoured inc­rease in capital market tax is unsubstantiated at this point, even though the mar­­ket has already decli­ned by 2.8pc week-on-week.

Meezan Bank, Pakistan Petroleum, Habib Bank, MCB Bank, OGDC and UBL lost value, weighing down the index by 302 points.

As a result, the benchmark index hit an intraday low of 71,781.96, losing 2,080.97 points and a high of 73,902.79, gaining 39.85 points. However, the index settled at 73,754.02 points after shedding 108.91 points or 0.15pc on a day-on-day basis.

However, the overall trading volume surged 58.63pc to 559.55 million shares. The traded value also rose 64.12pc to Rs20.20bn day-on-day.

Stocks contributing significantly to the traded volume included Pervez Ahmed Co (78.92m sha­res), Fauji Cement (34.39m shares), WorldCall Tele­com (28.267m shares), The Searle Company (23.34m shares) and K-Electric Ltd (21.67m shares).

Foreign investors remai­ned net sellers as they sold shares worth $0.33m.

Published in Dawn, June 8th, 2024

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