Uncertainty on government measures in the upcoming budget and the key policy rate played on the minds of investors as the benchmark KSE-100 index lost over 500 points on Monday.
The KSE-100 started the session with some buying and hit an intra-day high of 73,915.45.
However, cautious investors resorted to profit-taking in the latter hours and pushed the index into the negative territory.
At close, the benchmark index settled at 73,252.56, down by 501.46 points or 0.68%.
First cut in 4 years: SBP reduces key policy rate by 150 basis points, takes it to 20.5%
“Today’s selling pressure can be attributed to investor concerns over potential tax increases on dividends, capital gains, and interest income in the upcoming budget, as well as uncertainty surrounding the monetary policy announcement scheduled for later today,” brokerage house Topline Securities said in its post-market report.
The decline was significantly impacted by HUBC, FFC, MEBL, OGDC, and PPL, which collectively subtracted 254 points from the index. In contrast, SRVI, PSO, SYS, NATF, and MTL contributed a combined 65 points to the index’s positive side, according to the report.
Market experts said negativity at the bourse comes amid uncertainty over the measures to be taken by the government in the upcoming budget.
Earlier, Minister of State for Finance, Revenue, and Power Division, Ali Pervaiz Malik, said the upcoming budget aims to protect the salaried class, especially those in the lower income bracket, as much as possible.
In a key development, the State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) decided on Monday to reduce the key policy rate by 150 basis points (bps), taking it to 20.5%, effective from June 11, 2024.
In its statement, the MPC said that while the significant decline in inflation since February was broadly in line with expectations, the May outturn was better than anticipated earlier.
During the previous week, the Pakistan Stock Exchange (PSX) remained highly volatile on investor concerns over rumours that tax rates could increase in the new budget and harsh conditions of IMF for new bailout package for Pakistan.
The benchmark KSE-100 index plunged by 2,124.46 points on week-on-week basis and closed at 73,754.02 points.
Globally, Asian stocks sank on Monday as traders heavily pared back on bets for Federal Reserve rate cuts this year given a still-tight US labour market, while a snap election call in France sparked wider political concerns and weighed on the euro.
Trading was thinned in Asia with Australia, China, Hong Kong and Taiwan out for public holidays, but MSCI’s broadest index of Asia-Pacific shares outside Japan still slumped 0.46%.
US futures eased slightly, with S&P 500 futures and Nasdaq futures down about 0.03% each, while the dollar was back on the front foot.
Meanwhile, the Pakistani rupee depreciated marginally against the US dollar, falling 0.06% in the inter-bank market on Monday. At close, the local unit settled at 278.37, a decline of Re0.17 against the greenback.
Volume on the all-share index decreased to 350.72 million from 559.55 million a session ago.
The value of shares plunged to Rs10.18 billion from Rs20.21 billion in the previous session.
Pervez Ahmed Co was the volume leader with 57.42 million shares, followed by Amtex Limited with 33.74 million shares, and WorldCall Telecom with 31.27 million shares.
Shares of 434 companies were traded on Monday, of which 133 registered an increase, 241 recorded a fall, while 60 remained unchanged.
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