Stocks close bearish amid tax hike concerns

Express Tribune

2 days ago

The Pakistan Stock Exchange (PSX) endured a volatile session on Monday as investor interest remained muted ahead of the federal budget announcement.
The KSE-100 index reached the intra-day high of 1,018 points before hitting the low of 899 points and closing at 118,878, a drop of 813 points, or 0.68%. Analysts attributed the bearish activity to reports of proposed tax hikes on banking and saving schemes as well as additional petroleum levies.
Moreover, the inflation rate accelerated last month, reversing the decline recorded in previous months. The Consumer Price Index (CPI) rose 3.5% year-on-year in May on account of a jump in food prices, which further dampened market sentiment.
Ahsan Mehanti of Arif Habib Corp commented that stocks closed under pressure in the pre-budget session. Reports of higher taxes on income from banking and saving schemes and petroleum levies in the FY26 budget impacted sentiment.
Mehanti added that concerns over geopolitical tensions and rupee fluctuations also played the role of catalysts in bearish close at the PSX.
At the end of trading, the benchmark KSE-100 index recorded a decrease of 813.29 points, or 0.68%, and settled at 118,877.81.
In its review, Topline Securities stated that the stock market exhibited volatility, with the index fluctuating within a wide band, primarily influenced by global market trends. Local equities faced selling pressure amid uncertainty surrounding the upcoming budget and the government's proposed 2-3% hike in tax rate on passive income.
The KSE-100 index reached the intra-day high of 1,018 points and intra-day low of 899 points, eventually closing at 118,878, a drop of 813 points, it said.
Topline noted that the upward momentum was supported by notable gains in Pakgen Power, National Foods, Meezan Bank, the National Bank of Pakistan and Bank AL Habib, which added 201 points to the index. Conversely, losses in Systems Limited, Engro Holdings and Pakistan Petroleum dragged the index down by 341 points.
In its commentary, Arif Habib Limited (AHL) said that Monday marked another session when the KSE-100 closed below 120,000 points.
Some 29 shares rose while 71 fell, with Pakgen Power (+10%), National Foods (+9.93%) and Meezan Bank (+0.72%) contributing the most to index gains. On the flip side, Systems Ltd (-4.98%), Engro Holdings (-1.76%) and Pakistan Petroleum (-1.78%) were the biggest drags, it said.
Pakistan's inflation rate accelerated in May, driven by a jump in food prices and reversing the decline seen in the last few months. The CPI rose 3.5% year-on-year, above AHL expectations of 3.04%.
"The KSE-100 continues to tread water below 120,000 and several key support levels below 120k appear to be inevitable," AHL commented.
JS Global analyst Mubashir Anis Naviwala commented that the PSX opened on a positive note and rallied to the intra-day high of 120,591 points. Later, selling pressure dragged the index down to close at 118,878, lower by 813 points.
"Looking ahead, we expect market pressure to persist in the near term; however, this may present a buying opportunity in select sectors. Investors are advised to accumulate fundamentally strong stocks in the cement, automobile and fertiliser sectors on dips," the analyst added.
Overall trading volumes decreased to 497.9 million shares compared with Friday's tally of 580.3 million. The value of shares traded was Rs23.5 billion.
Shares of 464 companies were traded. Of these, 193 stocks closed higher, 231 fell and 40 remained unchanged.
Dewan Cement was the volume leader with trading in 40.4 million shares, gaining Rs0.60 to close at Rs12.67. It was followed by Invest Bank with 31.9 million shares, gaining Rs0.84 to close at Rs2.31 and K-Electric with 30.9 million shares, falling Rs0.23 to close at Rs5.09. Foreign investors sold shares worth Rs1.97 billion, the National Clearing Company reported.