Pakistan’s benchmark stock index, the KSE-100, experienced its most significant surge in a year on Thursday, buoyed by the unveiling of the 2024-25 budget, which alleviated market concerns about potential hikes in capital gains and dividend taxes.
The KSE-100 index soared by 3,410.7 points, or 4.7%, reaching an unprecedented high of 76,208 points. This marked the largest single-day increase in point terms in the index’s history and the highest percentage gain since the International Monetary Fund’s (IMF) bailout package last year.
Throughout the trading day, the index maintained a positive trajectory, peaking at an intraday high of 76,338.15 (+3,540.72 points) and dipping to a low of 73,329.80 (+532.37 points). The trading volume for the KSE-100 was robust, with 344.98 million shares exchanged.
Out of the 100 companies listed on the index, 87 saw gains, 9 recorded losses, and 4 remained unchanged. The government’s decision to set the capital gains tax (CGT) at a flat rate of 15% for filers on securities acquired on or after July 1, 2024, was a critical factor driving market optimism. For non-filers, gains will be taxed at standard rates, ranging from a minimum of 15% to a maximum of 45%.
Arif Habib Limited noted in its budget review that the clarification on CGT rates removed a significant source of market uncertainty, positively impacting investor sentiment. Similarly, AKD Securities remarked that the budget is overall neutral for the market, with the CGT flat rate being particularly relevant for retail and high-net-worth investors with holding periods of less than a year.
Key sectors contributing to the index’s rise included Commercial Banks (+1,074.36 points), Oil & Gas Exploration Companies (+578.9 points), Fertilizer (+451.08 points), Cement (+434.59 points), and Power Generation & Distribution (+257.02 points). Conversely, sectors such as Textile Composite (-68.44 points), Food & Personal Care Products (-45.99 points), and Leasing Companies (-0.07 points) underperformed.
Top contributors to the index’s gains were HUBC (+227.89 points), MCB (+221.91 points), UBL (+208.84 points), OGDC (+208 points), and FFC (+200.43 points). Companies that weighed on the index included COLG (-62.23 points), ILP (-60.76 points), KTML (-6.02 points), SCBPL (-2.59 points), and PKGP (-2.32 points).
The broader market also reflected positive sentiment, with the All-Share index closing at 48,497.08, a net gain of 1,662.79 points or 5.28%. Total market volume surged to 635.53 million shares from the previous session’s 293.08 million, with a traded value of Rs30.75 billion, up by Rs20.15 billion. There were 301,705 trades across 425 companies, with 294 gaining, 87 losing, and 44 remaining unchanged.
TOP TEN COMPANIES BY VOLUME:
- K-Electric Limited (KEL) – 66,835,469 shares
- Fauji Cement Company Limited (FCCL) – 39,803,815 shares
- Worldcall Telecom Limited (WTL) – 21,752,929 shares
- Oil & Gas Development Company Limited (OGDC) – 17,606,435 shares
- D.G. Khan Cement Company Limited (DGKC) – 17,350,798 shares
- The Searle Company Limited (SEARL) – 16,964,687 shares
- Pak Elektron Limited (PAEL) – 16,246,300 shares
- Pakistan Petroleum Limited (PPL) – 15,368,916 shares
- Pak Suzuki Motor Company Limited (PASL) – 14,829,395 shares
- Maple Leaf Cement Factory Limited (MLCF) – 14,728,584 shares
To note, the KSE-100 has gained 34,755 points or 83.84% during the fiscal year, whereas the ongoing calendar year has witnessed a cumulative increase of 13,757 points, equivalent to 22.03%.
CURRENCY MARKET PERFORMANCE
The Pakistani rupee (PKR) appreciated by 1.64 paisa against the US dollar, closing at PKR 278.59 per USD in Thursday’s interbank session, compared to the previous session’s closing of PKR 278.61 per USD. The currency saw an intraday high (bid) of 278.85 and a low (ask) of 278.65. In the open market, exchange companies quoted the dollar at 277.48 for buying and 280.12 for selling.
The domestic currency saw an upward momentum against the USD today following the budget announcement, which is expected to lay the foundation for a larger and extended program with the IMF, aiming to achieve economic stability.
In comparison to major currencies, PKR lost 1.89 rupees against the Euro, closing at 301.28 compared to the previous value of 299.39. The British Pound became more expensive by 98.2 paisa, closing at 356.26 compared to 355.28 from a day ago. The Swiss franc saw gains of 62.36 paisa, closing at 311.26 compared to 310.63 from the previous session. Against the Japanese Yen, PKR gained 0.03 paisa, closing at 1.7713 versus 1.7716 a day ago. The Chinese Yuan gained 0.78 paisa, closing at 38.42 against 38.41 from the previous session. The Saudi Riyal closed at 74.27 with a loss of 1.43 paisa from its value of 74.28 a day ago. The U.A.E Dirham decreased in value by 0.55 paisa from 75.85 a day ago to 75.85.
During the current financial year, PKR has appreciated against the Dollar by 7.4 rupees or 2.66%. While the current calendar year has seen PKR appreciate by 3.27 rupees or 1.17%.
MONEY MARKET OVERVIEW
In the Money Market, the benchmark 6 Month Karachi Interbank Bid and Offer rates inched down by 4 bps to 19.82% and 20.07%, respectively.
GOLD AND SILVER PRICES
The price of 24-karat gold in Pakistan decreased on Thursday, with gold being sold at Rs240,700 per tola, down Rs1,200 per tola. The Karachi Sarafa Association reported the price of 24-karat gold at Rs206,361 per tola per 10-gram, down Rs1,029 per tola. The price of 22-karat gold was quoted lower at Rs189,165 per 10-gram.
On the other hand, silver prices remained unchanged in the domestic market, with 24-karat silver being sold at Rs2,750 per tola and Rs2,358 per 10-gram.
On the global front, spot gold traded near $2,305 an ounce, down $15.5 or 0.67% from the previous session. A report on Wednesday showed the US core consumer price index fell to its lowest in more than three years, spurring bets on faster policy easing. Later, the Federal Reserve penciled in just one quarter-point interest-rate cut this year, down from three seen in March. Swap traders are currently pricing in a 25-basis-point rate cut by November, with a 75% likelihood of a similar reduction by year-end. This compares with a 50% chance of a second cut two days ago. US producer prices may offer more signals later on Thursday.
MARKET OUTLOOK
The budget’s impact on the stock market has been overwhelmingly positive, dispelling fears regarding tax hikes and instilling confidence among investors. As the fiscal year progresses, the market will likely monitor the implementation of budget measures and their alignment with broader economic stabilization efforts under the IMF program.
