Stocks dip by 108 points amid fears of rising power tariff

KARACHI: Stocks witnessed a volatile day, as the market decreased sharply in the early session amid rumours regarding an increase in capital gains tax in the upcoming budget and concerns about surging power tariffs. However, the market saw some recovery later in the session.

The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 share Index decreased by 108.91 points or 0.15 per cent to 73,754.02 points against 73,862.93 points recorded in the last session. The highest index of the day remained at 73,902.79 points while the lowest level was recorded at 71,781.96 points.

Analyst Ahsan Mehanti at Arif Habib Corp said, “Stocks closed lower on concerns for surging power tariff impacting industrial earnings and Moody’s rating projections for withdrawal of FX reserves for foreign debt repayments raising near-term default risk high.”

He said cautious activity ahead of the SBP policy announcement, and uncertainty over tax measures on the capital markets in the FY25 budget to seek an $8bn IMF loan under the EFF played a catalyst role in the bearish close.

The KSE-30 index decreased by 74.58 points or 0.31 per cent to 23,616.68 points against 23,691.27 points.Traded shares rose by 207 million shares to 559.550 million shares from 352.738 million shares. The trading value rose to Rs20.208 billion from Rs12.312 billion. Market capital narrowed to Rs9.903 trillion against Rs9.946 trillion. Of 441 companies active in the session, 180 closed in green, 200 in red and 61 remained unchanged.

Nabeel Haroon, an analyst at Topline Securities, said a volatile session was observed at the exchange where the index declined to make an intraday low of -2,081 points largely on rumours that in the FY25 budget, rates for capital gains and dividend taxes might be increased to match standard personal or corporate income tax rates, with the maximum personal income tax slab rising to a maximum slab of 45 per cent.

However, he said, as the day progressed, better sense prevailed as investors came in to accumulate shares given the monetary policy meeting on Monday where the market expected a cut in the policy rate by 100-200 basis points and the fact increase in tax on the capital market is a rumour at this point (where the market has already declined by -2.8 per cent on WoW basis). The KSE-100 Index finally settled at the 73,754 level (down by -0.15 percent).

The highest increase was recorded in Sapphire Fibres Limited shares, which rose by Rs62.21 to Rs1,499.41 per share, followed by Hoechst Pakistan Limited, which increased by Rs38.33 to Rs1,400 per share. A significant decline was noted in Rafhan Maize Products Company Limited, which fell by Rs299.40 to Rs7,587.05 per share, Nestle Pakistan Limited followed it, which closed lower by Rs292.91 to Rs6,995.33 per share.

Brokerage Arif Habib Ltd stated the PSX experienced a tumultuous trading week, with the KSE-100 index closing down 2.8 per cent week-on-week. The declines extended to a low of 71,781 before a sharp recovery on Friday saw the index close at 73,700.

Throughout the week, market sentiment was largely negative. The biggest downside contributors were Meezan Bank Limited (MEBL), which declined by 3.73 per cent, Pakistan Petroleum Limited (PPL) down 2.14 per cent, and Habib Bank Limited (HBL) which saw a drop of 1.81 per cent.

Conversely, some stocks managed to provide support to the index; Fauji Fertilizer Company Limited (FFC) rose by 2.24 per cent, Millat Tractors Limited (MTL) gained 2.55 per cent, and Systems Limited (SYS) increased by 1.22 per cent.

The sharp recovery on Friday, following a week marked by a significant 5.81 per cent drawdown, was a positive sign. However, analysts caution that it is still too early to be optimistic about a sustained upward movement.

The market is expected to remain volatile with the upcoming Budget announcement and the Monetary Policy Committee (MPC) meeting acting as potential triggers for further fluctuations.

Pervez Ahmed Co remained the volume leader with 78.926 million shares which closed higher by one 80 paisas to Rs1.50 per share. Fauji Cement followed it with 34.397 million shares, which closed higher by 85 paisas to Rs22.79 per share.

Other significant turnover stocks included WorldCall Telecom, The Searle Company, K-Electric Ltd., Pak Refinery, PIA Holding Company, Hum Network, BO Punjab and Kohinoor Spining. In the futures market, 311 companies recorded trading, of which 115 increased, 188 decreased and 8 remained unchanged.