The Pakistan Stock Exchange (PSX) commenced its post-budget session on a notably upbeat trajectory, witnessing significant gains as the benchmark KSE-100 index surged past the 75,000 mark during Thursday’s trading session. By 2:30 pm, the index stood impressively at 75,880.06 points, reflecting an impressive increase of 3,082.63 points or 4.23%.
Across-the-board buying activity was prominent across key sectors, including automobile assemblers, cement, commercial banks, engineering, oil and gas marketing companies (OMCs), and refineries. This surge in sectoral performance followed the unveiling of Pakistan’s federal budget for 2024-25 by Finance Minister Muhammad Aurangzeb on Wednesday.
In response to the budget announcement, analysts have expressed optimism regarding its impact on the market. Sana Tawfik, Head of Research at Arif Habib Limited (AHL), highlighted the positive aspects of the budget, particularly noting the government’s decision not to alter the treatment of Capital Gain Tax (CGT), which is viewed favorably by investors.
“The budgetary measures are positive as the government demonstrates its commitment to tax reforms, particularly targeting non-filers,” remarked Tawfik, underlining the market’s favorable reception of the fiscal policy adjustments.
The stability in tax rates for dividends income, applicable to both filers and non-filers, was particularly welcomed by market observers, countering earlier speculations of potential tax hikes. Meanwhile, sectors such as cement and engineering reacted positively to the government’s announcement of an increased Public Sector Development Programme (PSDP).
“Despite the Federal Excise Duty (FED) hike on cement, which is likely to be passed on to consumers, the higher allocation in PSDP has buoyed investor sentiment in these sectors,” explained Tawfik, illustrating the nuanced response of the market to specific budgetary provisions.
However, not all sectors experienced gains, with textile stocks facing downturns during the trading session. Tawfik attributed this to the government’s proposal to integrate exporters into the normal tax regime, a move perceived as unfavorable for the textile industry’s competitive edge.
Globally, Asian equities rallied on Thursday amidst mixed signals from the US economy. The Asia-Pacific shares outside Japan rose by 0.9%, driven by strong performances in Taiwan and Hong Kong markets following record highs in the US S&P 500 and Nasdaq indices.
The outlook for US markets also remained positive, with futures indicating further gains as investor sentiment weighed cooling US inflation against the Federal Reserve’s hawkish stance on monetary policy.
