Day after biggest single-day rally, PSX briefly crosses all-time high of 77,000

Published June 14, 2024
This screengrab, taken at 11:09am, shows PSX activity on June 14. — PSX data portal
This screengrab, taken at 11:09am, shows PSX activity on June 14. — PSX data portal

The Pakistan Stock Exchange (PSX) on Friday gained more than 1,000 points in intraday trade to briefly hit an all-time high of 77,000, just a day after the trading floor witnessed the biggest single-day gains.

The KSE-100 index gained 1,097.12 points, or 1.44 per cent, to stand at 77,305.28 at 11:04am from the previous close of 76,208.16, the PSX data portal showed. Finally, the index closed at 76,706.77, up by 498.61 or 0.65pc, from the previous close.

Raza Jafri, chief executive of EFG Hermes Pakistan, said, “The feel-good factor post the budget continues, driven by improving liquidity with local institutions as the commencement of monetary easing sees rotation into equities.”

Yousuf M Farooq, director research at Chase Securities attributed the bullish momentum to “reduced uncertainty and increased buying by mutual funds, driven by conversions from fixed income to equity funds”.

“We believe that as interest rates gradually decline, stock market valuations will continue to rerate upwards,” he added.

Awais Ashraf, director research at AKD Securities, credited the rally to the budget being in like with the International Monetary Fund (IMF) recommendations and the “status quo on capital gain tax on sale of securities”.

“The presentation of the FY25 budget in line with IMF requirements would pave the way for a new extended fund facility and thus help cement the macroeconomic stability achieved in the last two years,” he explained.

“The budget is neutral for the overall market, as a Capital Gains Tax (CGT) of 15pc on purchases from July 2024 onward is imposed at a flat rate, given the holding period of less than one year for majority of retail and high-net-worth (HNW) investors,” he highlighted, adding that an “increase in taxation rate on dividend income derived from debt securities of mutual funds is slightly positive for market”.

Additionally, he said that “there is no significant change in the factors affecting the top three sectors of the Pakistan Stock Exchange (PSX). However, the removal of exporters from the final tax regime of 1pc turnover tax is a material negative for the textile sector and some players in the steel sector”.

“Investors welcome the tax parity created between PSX and other asset classes,” says Amreen Soorani, head of research at JS Global Capital.

The government is looking to raise tax revenue of 13 trillion rupees ($47 billion) for the year starting July 1, up nearly 40pc from the current year.

The country is seeking an estimated loan from the IMF ranging from $6 billion to $8 billion to avert default in an economy growing at the region’s slowest pace.

On Thursday, the benchmark index gained more than 3,400 points in intraday trade, which came a day after the government unveiled the federal budget for the next fiscal year.

The budget cheered investors by avoiding an anticipated increase in capital gains tax, despite an ambitious tax revenue target.

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