- The KSE-100 index lost 1,598.82 points and closed at 113,443.43.
- The index hit an intraday low at 113,359.37 amid selling pressure.
- The benchmark index hit an intraday high of 115,256.16 points.
The capital market remained under pressure on Wednesday as the benchmark KSE-100 index fell amid growing concerns over regulatory developments, economic uncertainty and weak global trends.
Investor confidence has been dampened by the Tax Laws Amendment Bill, 2024, which limits the ability of non-filers to buy stocks, alongside instability in the rupee, uncertainty over negotiations between the government and the PTI and the weakness of global crude oil prices.
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 index closed sharply lower by 1,598.82 points, or 1.39 per cent, to settle at 113,443.43.
The session saw the index slip to a low of 113,359.37 after hitting an intraday high of 115,256.16, reflecting persistent selling pressure and weak investor sentiment.
“Stocks remained bearish on concerns over the Tax Laws Amendment Bill of 2024 prohibiting non-filers from making stock purchases beyond limits,” said Ahsan Mehanti, Managing Director and CEO by Arif Habib Commodities.
“Instability in the rupee, uncertainty over government-PTI negotiations and weak global crude oil prices played a catalytic role in the bearish activity,” it added.
Adding to investors’ concerns, the National Assembly was informed on Monday of the government’s plan to combat the underground economy, broaden the tax base and reduce the use of regressive taxation.
Minister of State for Finance Ali Pervaiz Malik has stressed that reforms in the tax system are a major priority as Prime Minister Shehbaz Sharif approved a plan to transform the Federal Board of Revenue (FBR).
The transformation plan, aimed at increasing tax compliance, comes in a context where it is difficult to achieve revenue targets. This policy change aims to streamline tax collection mechanisms and address structural inefficiencies in the tax system.
Foreign investment in Treasury bills (T-bills) recorded a net outflow of $38.5 million in the first 10 days of January. While inflows reached $51.978 million, withdrawals stood at $90.51 million, reflecting declining interest from foreign investors due to falling yields.
The State Bank of Pakistan’s (SBP) decision to cut its policy rate by 200 basis points (bps) to 13% last month, marking the fifth consecutive rate cut in 2024, reduced bond yields. Treasure. The total rate cuts for 2024 amount to 900 basis points, helping to reduce the attractiveness of foreign investors for Pakistani bonds.
On Tuesday, the PSX came under pressure during earnings season, with the KSE-100 index losing 803 points to close at 115,042.25. Despite this decline, the index maintained the critical threshold of 115,000 points.
The stock market remains sensitive to macroeconomic developments and investor sentiment regarding political and fiscal stability.
As the IMF mission prepares to visit Islamabad next month, investors will remain focused on the government’s compliance with the Extended Fund Facility program.