KARACHI: Spectac­ular post-budget rallies helped the benchmark index scale a new peak above the 76,000 level in the outgoing week, ending the seven-session downturn amid fears of high taxes on equity investments.

Arif Habib Ltd (AHL) said that despite a 150-basis-point cut in the SBP policy rate to 20.5 per cent announced on the first day of the week, the market remained jittery due to concerns over a significant increase in taxes on capital gains and dividends.

As the week progressed, market sentiment turned positive when it was revealed that the budgetary proposals for 2024-25 included a lower-than-expected increase in the capital gains tax (CGT) while maintaining the dividend tax.

This change spurred bullish activity, leading to a record day-on-day increase of 3,411 points in the index on Thursday. Consequently, the market reached an all-time intra-day high of 77,310 points on Friday.

Additionally, the government raised Rs1,208bn in T-bill auction against a target of Rs780bn. However, the cut-off yield on three-month tenor was cut by 85bps, 103bps for six-month and 115bps for 12-month papers.

The State Bank of Pakistan’s foreign excha­nge reserves declined meagrely by $6.2m or 0.07 pc to $9.1bn in the week ending on June 7.

As a result, the KSE-100 index settled at 76,706.77 points after surging by 2,953 points or 4pc week-on-week.

Foreign selling was witnessed during the week, clocking in at $5.8m compared to a net buy of $4.4m last week. Significant selling was seen in exploration and production ($2.7m) and ‘all other sectors’ ($1.8m). On the local front, buying was reported by mutual funds ($11.1m), followed by companies ($7.9m).

The average trading volume fell 3.3pc to 410m shares, while the average value traded settled down 1.7pc to $61m week-on-week.

With Eidul Azha falling on June 17, the market will be open for only two days next week, resulting in lower activity.

According to AHL, despite the shortened trading period, investors will be closely monitoring developments related to the new IMF programme.

Published in Dawn, June 16th, 2024