Pakistan Stock Exchange witnessed strong selling pressure on Monday with opening of the KSE-100 benchmark index in red and fell at 1134.80 points close well below mark 41000 in what experts called a reaction to the annual budget submitted by the federal government on Friday.
Analysts attributed today’s bearish activity to government tax increase on banking sector in to the budget, among other factors.
According to the Pakistan Stock Exchange (PSX) website, the index was down 1016.79 points at 3 pm and kept sliding in in last hour of trading close 1134.80 points or 2.7 pieces, down.
Chapter of research at Intermarket Securities, Raza Jafri, said the shares market today was under pressure due to the fact that the banking sector index fell sharply down.
“This is because the banking sector has saddled with much higher tax rate”, he said, adding that new budget removes the tax credit available on investment in mutual funds and life insurance, also raising concerns over redemption.
Chapter of research at Aba Ali Habib Securities, Salman Naqvi, also said that the bearish trend was result of higher taxes on the banking sector, which has a significant weight in stock market.
Moreover, according to him, government proposed more taxes for construction sector in in new budget and it led to a decline in cement and steel shares.
Naqvi also attributed the fall to Finance Minister Miftah Ismail, who said the International Monetary Fund (IMF) was unhappy with in budget.
Speaking at post-budget news briefing on saturday, finance minister It was built happening for more experiencing decisions and hinted at reducing or canceling aid on there is a personal income tax in in next yearsх budget, saying that the IMF is not ready give up in demand for higher profitability.
“It’s strange what he said,” Naqvi said, adding that budget otherwise it wasn’t bad exclusively led to slip of the KSE-100 index and was regarded as “from neutral to positive”.
Ahsan Mehanty of Arif Habib Corporation also cited higher taxes on banking sector as main reason behind today’s ruin. “[The] PSX is a witness[ing] massive pressure in listings through board among post-budget consolidation after higher taxes [were] hit on blue chips, contingency taxes on [the] banking sector and [the] removal of tax incentives on mutual and pension funds,” he said. Dawn.com.
“Institutional Selling on global sale of sharesoff as well as [a] recession in global Crude oil prices played a catalyst role in bearish activity,” he said. added.
in budget for upcoming fiscal year, government increased the tax on windfall profits for banks from 39% to 42%, which received stable profits because of huge investment in government securities.
Stock market closed last a week on slightly positive note on rising crude oil prices and likely resumption of IMF loan program in nearest term.