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Bloodbath at PSX as KSE-100 index plunges over 1,600 points on PM Shehbaz’s ‘tough’ decisions

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  • The market closes at 41,051.73 points after losing 3.9%
  • Analyst says 10% super tax on large-scale industries unexpected. 
  • Shares of 364 companies were traded during the session.

KARACHI: The Pakistan Stock Exchange (PSX) Friday witnessed a bloodbath immediately after Prime Minister Shehbaz Sharif announced “tough decisions” taken by the government in the federal budget for the upcoming fiscal year 2022-23.

The benchmark KSE-100 index opened in the green in line with its positive trend a day earlier; however, it soon plunged over 2,000 points or nearly 5%. 

At close, benchmark KSE-100 index closed at 41,051.79 points after plunging 1,665.18 points or 3.9%.

Benchmark KSE-100 index intra-day trading curve. — PSX data portal
Benchmark KSE-100 index intra-day trading curve. — PSX data portal

In his address to the nation, the premier announced that a 10% super tax would be imposed on large-scale industries including cement, steel, sugar, oil and gas, fertiliser, banking, textile, chemical, beverage, and automobile sectors.

Speaking to Geo.tv, Arif Habib Limited Head of Research Tahir Abbas said the market is reacting to the news of the imposition of super tax on large-scale industries.

“A 10% super tax on large-scale industries is on the higher side and the market didn’t expect this, therefore the reaction is intense,” he said.

The analyst was of the view the market will now stay under pressure in the days to come until budget 2022-23 is passed in the National Assembly and the finance act is released, which will reveal the exact details of the “tough” decision taken by the government.

Shares of 364 companies were traded during the session. At the close of trading, 61 scrips closed in the green, 287 in the red, and 16 remained unchanged.

Overall trading volumes rose to 424.22 million shares compared with Thursday’s tally of 349.48 million. The value of shares traded during the day was Rs12.8 billion.

K-Electric was the volume leader with 36.66 million shares traded, gaining Rs0.01 to close at Rs2.86. It was followed by Cnergyico PK Limited with 25.85 million shares traded, losing Rs0.43 to close at Rs5.35 and Pakistan Refinery with 25.3 million shares traded, losing Rs1.44 to close at Rs18.10.

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In a first for history, PSX crosses the 77,000 milestone.

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At 77,213.31, the benchmark KSE-100 hit an all-time high, up 1,005.15, or 1.32%, from the previous close of 76,208.16.

The government’s readiness to seal an agreement with the International Monetary Fund (IMF) following the budget was cited by analysts as the reason for the upward trend.

Experts anticipate that in an attempt to bolster its position for a fresh bailout agreement with the International Monetary Fund (IMF), the budget for the fiscal year ending in June 2025 would set aggressive fiscal goals.

Budget for Pakistan, 2024–2025
Pakistan’s budget for the fiscal year 2024–25, with a total expenditure of Rs18.877 trillion, was presented on Wednesday by Minister of Finance and Revenue Muhammad Aurangzeb.

The Finance Minister, Muhammad Aurangzeb, outlined the budget highlights. He stated that the GDP growth target for the fiscal year 2024–25 is set at 3.6 percent, while the inflation rate is anticipated to stay at 12 percent.

He stated that while the primary surplus is anticipated to be 1.0 percent of GDP during the review period, the budget deficit to GDP is forecast to be 6.9 percent over the period under review.

According to the minister, tax income collection increased by 38% in the current fiscal year, and the province will receive Rs7,438 billion. The Federal Board of income expects to earn Rs12,970 billion in revenue for the upcoming fiscal year.

In contrast to the federal government’s projected net income of Rs9,119 billion, he stated that the federation’s non-tax revenue projections are set at Rs3,587 billion.

The federal government’s total outlays are projected to be Rs18,877 billion, with interest payments accounting for the remaining Rs9,775 billion.

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Pakistan currently has $14.38 billion in foreign exchange reserves.

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Pakistan’s commercial banks’ reserves, which stood at $5.28 billion at the conclusion of the week ending on June 7, rose by US$174 million, according to a central bank statement.

Reserving US$6.2 million less, the SBP now has US$9.10 billion in reserves. The causes for the decline in the reserves it had were not disclosed by the central bank.

The SBP released a statement that stated, “SBP reserves decreased by US$ 6 million to US$ 9,103.3 million during the week ended on 07-June-2024.”

The State Bank of Pakistan’s (SBP) foreign exchange reserves were reduced by US$ 63 million as a result of repaying external debt, with the reserves standing at US$ 9.093 billion as of earlier on June 6.

The central bank spokesperson said in a statement that as of the week that concluded on May 31, the nation’s total liquid foreign reserves were $14.31 billion.

In terms of net foreign reserves, commercial banks have US$ 5.22 billion of the overall foreign reserves, according to the SBP.

SBP reserves dropped by US$ 63 million to US$ 9,093.7 million during the week that ended on May 24, 2024, according to the announcement.

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In the local market, the price of gold plummets to Rs240,700/tola.

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Gold with a 24-karat purity level has dropped by Rs1200/tola on the local market.

Each tola of 24-karat gold is now selling for Rs240,700, with a further drop of Rs1029 bringing the price of 10 kilos of gold to Rs206,361. These figures are courtesy of the All Sarafa and Jewelers Association.

Meanwhile, after a $2 decline on the global market, one ounce of gold will be valued $2315.

A tola of gold was worth Rs 600 more on Wednesday.

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