Markets opened on an overwhelmingly positive note in its post-budget session, with the benchmark KSE-100 index surging over 1,900 points during the opening hours of trading on Thursday. At 10:10am, the index was hovering at 74,717.95, marking an increase of 1,920.52 points or 2.64% report Presstonight
The rally saw broad-based buying across key sectors including automobile assemblers, cement, commercial banks, engineering, oil and gas marketing companies (OMCs), and refineries.
This market enthusiasm followed the announcement of Pakistan’s federal budget for 2024-25 by Finance Minister Muhammad Aurangzeb on Wednesday. The budget targets a modest 3.6% growth for the coming fiscal year, as Islamabad aims to satisfy the International Monetary Fund (IMF) and manage its fiscal responsibilities through increased taxation.
Analysts view the budget positively, noting that there were no changes to the treatment of Capital Gain Tax (CGT) to normal tax. “Overall the budgetary measures are positive in a sense, that the government has shown intent to bring tax reforms, especially taking stringent measures against nonfilers,” said Sana Tawfik, Head of Research at Arif Habib Limited (AHL).
Furthermore, the government has proposed no changes in tax rates for dividend income for both filers and non-filers, which is favorable for the market. “This is positive for market as there were some news reports suggesting tax on dividend income will go up,” noted Topline Securities in a briefing.
Cement and engineering stocks benefited from the increase in the Public Sector Development Programme (PSDP) announced by the government. “Although Federal Excise Duty (FED) was increased on cement, which will be passed on to the customers, the increase in PSDP pushed the sector into positive,” explained Tawfik.
The finance minister announced that Rs1.4 trillion have been earmarked for the PSDP in his budget proposal to the National Assembly.
However, not all sectors responded positively. Textile stocks remained in the red as the government proposed bringing exporters into the normal tax regime, which is seen as a negative development for the sector.
On Wednesday, the KSE-100 Index had already gained over 200 points to settle at 72,797.43.
Globally, Asian equities rallied on Thursday, while bond yields slid, as investors considered cooling US inflation against a more hawkish stance by the Federal Reserve. MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.9%, with Taiwan stocks jumping 1.7% and Hong Kong’s Hang Seng up nearly 1%, buoyed by record highs in the US S&P 500 and tech-heavy Nasdaq overnight. US futures indicated further gains, with S&P futures up 0.2% and Nasdaq futures adding 0.6%. Japan’s Nikkei edged up 0.1% after an initial tech-led advance fizzled.
