The stock market was turbulent on Tuesday as investors remained cautious after recent volatility and optimism over improving macroeconomic indicators.
The market started well thanks to political stability and supportive monetary policies, then oscillated with the appearance of profit-taking.
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 index initially rose 1,112.08 points, or 0.98 percent, to an intraday high of 115,036.49, demonstrating renewed investor confidence .
However, the index faced significant downward pressure, falling to an intraday low of 112,294.42 before closing at 112,414.80, marking a decline of 1,509.61 points or 1.33%. compared to the previous close of 113,924.41.
“Profit-taking after yesterday’s hike is weighing on the market,” said Samiullah Tariq, head of research at Pak-Kuwait Investment Company. Geo.tv.
The much-awaited dialogue between the Pakistan Tehreek-e-Insaf (PTI) and the government, in an atmosphere of constructive interaction, has helped to allay concerns related to political stability in the business community.
The recent cut in the State Bank of Pakistan’s (SBP) policy rate by 200 basis points to 13% continues to support market activity on the back of reduced funding costs and economic outlook.
The highest current account surplus in a decade of $729 million for November also contributed to the improving economic sentiment. This is significant when compared to the $148 million deficit recorded in the same month last year and a surplus for the fourth consecutive month.
The country’s electricity production increased 6% year-on-year in November to 8,032 GWh, reflecting a gradual recovery in industrial activity. The government also raised 382 billion rupees through Pakistan Investment Bonds, with yield limits sliding up to 55 basis points depending on maturities, reflecting strong demand for long-term government securities.
FDI increased significantly, with inflows reaching $219 million in November, up 65% month-on-month and 27% year-on-year. The country received a total of $1.13 billion in FDI in the first five months of FY25, an increase of 112% compared to the same period last year.
Finance Minister Muhammad Aurangzeb has proposed the Tax Laws Amendment Bill, 2023, which calls for tough action against non-filers by banning the purchase of vehicles, properties and shares above 800 cc . The law gives the Federal Board of Revenue (FBR) the power to freeze bank accounts and block the transfer of assets of such persons.
However, FBR Chairman Rashid Langrial clarified things by stating that there would be no increase in the tax rate as it would not help in achieving the desired revenue targets.
Speaking on Geo News’ Under the ‘Naya Pakistan’ scheme, the FBR Chairman admitted that there was a revenue leakage of Rs 1.2 trillion in the income tax sector alone because the top 1% of earners richest people in the country were being declared.
The stock market outperformed traditional investment avenues like bonds, gold and the US dollar in 2024, notes a Topline Securities report, largely due to economic reforms under the IMF program and a reduction in the interest rate channeled to the stock market.
Despite the mixed trend seen on Tuesday, the PSX continues to remain attractive to investors due to attractive valuations and improving economic fundamentals.