KARACHI: In a topsy-turvy session, the stock market extended its record-setting spree despite aggressive profit-taking in early trading on Friday, mainly driven by selling in the banking scrips.

Ali Najib, Head of Sales at Insight Securities, said the market witnessed correction, recovery and value-hunting. “Corre­ction-cum-profit-taking in banking sector scrips was observed due to rumours regarding additional tax on banks’ earnings as negotiation continues between banks and the committee formed by the prime minister under the supervision of Ishaq Dar on the Advance-to-Deposit Ratio (ADR) issue,” he noted.

However, he said the auto sector led the recovery in anticipation of 100pc increase in auto financing limit from Rs3 to 6 million ahead of the Monetary Policy Committee meeting scheduled for Dec 16, where the market expects another cut of 200-250bps. Value-hunting was done in the E&P and OMC sectors due to better cash flows and handsome earnings post-reform.

Topline Securities Ltd said a bound session was observed at the exchange as the index traded between its intraday high of 992 points and low of 1,571 points to close at 114,302, up 121.29 points or 0.11pc day-on-day.

The pressure was observed in the banking sector as it closed lower, where United Bank, Mee­zan Bank, Bank Al-Habib, Habib Bank and Bank Alfalah cumulatively lost 860 points to weigh down on the index. Conversely, Mari Petro­leum, OGDC, PSO, FFC and Lucky Cem­ent added 1,355 points.

The selling pressure can be attributed to the noise of the Dar-led committee’s finalising recommendations for alternatives to the ADR-based tax regime.

The government introduced higher tax rates on investment income for banks with ADR below 50pc to increase commercial lending and tax-passive income through the Finance Act 2022.

Ahsan Mehanti of Arif Habib Corporation said the trading was buoyed by hopes for a potential government-PTI patch-up, speculations over potential SBP policy easing next week amid thin inflation and the finance minister’s assurance that the economy is on the road to attaining stability.

However, the trading volume dipped 23.88pc to 1.11 billion shares while the traded value tumbled 11.54pc to Rs59.51bn day-on-day.

Published in Dawn, December 14th, 2024