The Pakistan Stock Exchange (PSX) saw a range-bound post-budget session on Monday with the benchmark KSE-100 Index witnessing volatility.
At the end of the session, the benchmark index was at 41,792.92, a decrease of 121.28 points or 0.29%.
The index opened marginally positive but fell slightly deep in the red before staging a recovery. Selling pressure in second half of the session erased all the gains.
Mixed trading was witnessed in index-heavy sectors, as commercial banks, chemicals, fertilisers, and pharmaceuticals remained in the red zone, whereas automobile, cement and refinery were trading in the green.
Experts said the market has incorporated the impact of the budget, as no major measures were announced by the government in its budget for FY 2023-2024.
“No surprise was seen in the budget FY23-24 announcement, thus a range-bound sentiment was expected,” Sana Tawfik, a research analyst at Arif Habib Limited (AHL), told Business Recorder.
“The market is expected to remain range bound, but it may also recover in the later part of the trading session,” she said.
The analyst said sector-specific impact was witnessed. Commercial banks were under duress after a number of proposals announced in the budget such as Super Tax, and tax on cash withdrawal for non-filers would have a negative effect on the sector.
Meanwhile, others were of the view that the government’s base case plan appears to pin the burden of revenues on the corporate sector with higher super tax, hefty retrospective tax on ‘extraordinary earnings’ and tax on bonus shares.
“Modalities of some of these measures are likely to face legal challenges as well,” Waqas Ghani Kukaswadia, Deputy Head of Research at JS Global, told Business Recorder.
“The market is witnessing mixed sentiments where one faction believes the budget to have a neutral impact as they think that most of the impact has already been incorporated while others worry about the increased taxes on the corporate sector.
“The key variable shaping medium-term sentiments, however, is likely to be any indication of the International Monetary Fund’s (IMF) response to the budget and whether Finance Minister’s Ishaq Dar indication of securing the 9th review within June comes true,” Ghani added.
On Friday, the Pakistan Muslim League-Nawaz (PML-N)-led coalition government presented the ‘election year’ budget for the fiscal year 2023-24, amid serious economic challenges and protracted delay in the 9th review of the International Monetary Fund (IMF) programme.
Finance Minister Ishaq Dar presented the second budget of the coalition government with an outlay of Rs14.46 trillion and a budget deficit of Rs6.923 trillion.
Dar claimed that a tax-free budget is being presented with relief to the agriculture sector, IT and IT-enabled services, SMEs, industrial export, and overseas Pakistanis to encourage business in the country.
A report from Capital Stake highlighted that volatility marred the PSX on first trading session of the week.
“Indices swung in both directions while volumes grew from last close,” it said. “Investor participation was low ahead of the monetary policy meeting.”
Moreover, contemplation over the budget and whether it would prove to be beneficial for the economy, also lead to a bearish trend, the report said.
In its report, Arif Habib Limited stated that PSX began the week with a range bound session.
“The benchmark KSE-100 index opened after the budget weekend with mixed sentiments, regarding the new policies announced in the fiscal budget. Investor activity remained sluggish for most of the day while the 3rd tier scrips led the volume board,” it said.
Sectors dragging the benchmark KSE-100 index downwards included, banking (83.76 points), oil and gas exploration (71.58 points) and textile composite (24.11 points).
Volume on the all-share index increased to 179.1 million from 164.8 million on Friday, while the value of shares traded surged to Rs5.6 billion from Rs5.2 billion recorded in the previous session.
Hascol was the volume leader with 16.4 million shares followed by TPL Properties with 13 million shares and Pak Refinery with 10.8 million shares.
Shares of 314 companies were traded on Monday, of which 108 registered an increase, 184 recorded a fall and 22 remained unchanged.
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