KSE-100 retreats on budget jitters, taxes
The Pakistan Stock Exchange (PSX) witnessed a volatile session on Thursday, with the benchmark KSE-100 index retreating after hitting record highs a day earlier. Investor sentiment turned cautious due to concerns about stringent conditions linked to a new International Monetary Fund (IMF) programme, including proposed enforcement of agriculture income tax and the IMF's opposition to provincial energy subsidies.
Adding to the bearish outlook were fears of aggressive fiscal measures in the upcoming FY26 federal budget. These include possible new taxes on banking and savings income, along with anticipated hikes in petroleum levies on petrol and diesel. A weakening rupee and a 10% year-on-year (YoY) decline in exports for May also dampened investor confidence.
Arif Habib Corporation Managing Director Ahsan Mehanti commented that the market declined following reports of IMF pressure for strict enforcement of agriculture taxation and improved tax collection mechanisms, while resisting provincial subsidies on power. "Expectations of higher taxes on banking and savings, increased petroleum levies, rupee instability, and a sharp YoY decline in exports all weighed on sentiment," he said.
The KSE-100 index closed at 121,641 points, down 157.87 points or 0.13% from the previous day. Despite the decline, the market remained within a broad range throughout the session, with an intra-day high of +483 points and a low of -281 points, according to Topline Securities. The firm noted that the range-bound activity came ahead of the long Eid holidays, following a recent rally.
Topline also highlighted the most traded companies by value, with Unity Foods leading at Rs1.67 billion, followed by Engro Holdings (Rs1.24 billion), K-Electric (Rs1.03 billion), Searle Company (Rs847 million), and TRG Pakistan (Rs785 million).
Arif Habib Limited (AHL) noted that despite the minor setback, the week had remained positive overall, with the market touching all-time highs. Engro Holdings (+3.24%), Pakgen Power (+10.0%), and Service Industries (+5.49%) contributed to the index's gains. On the downside, Meezan Bank (-2.11%), Systems Ltd (-1.68%), and Fauji Fertilizer (-0.5%) were key laggards.
In broader developments, Prime Minister Shehbaz Sharif is scheduled to visit Saudi Arabia on June 5-6 to meet Crown Prince Mohammed bin Salman for talks on bilateral cooperation, regional security, and economic collaboration. Meanwhile, Sui Northern Gas Pipelines Limited (SNGPL) stated in a corporate briefing that its capital expenditure (capex) is expected to hover around Rs30 billion annually over the coming years.
Analysts projected 120,000 points to act as a post-Eid base level for the KSE-100, with potential to move higher provided macroeconomic stability continues.
KTrade Securities echoed similar views in its market wrap, observing that despite the volatility, trading activity remained strong with volume reaching 854 million shares. Leading the volume chart were K-Electric (179 million shares), Unity Foods (62 million), and WorldCall Telecom (52 million).
However, slight profit-taking was noted in banking, cement, and oil and gas sectors. KTrade added that investors are expected to stay cautious in the lead-up to the federal budget announcement on June 10, 2025.
JS Global analyst Mubashir Anis Naviwala reported that the index had opened positively and surged to a new intra-day high of 122,281, but profit-taking dragged it down by the close. Notable trading activity was seen in oil & gas, fertiliser, power, and banking sectors.
A total of 478 companies' shares were traded. Among them, 217 closed higher, 208 declined, and 53 remained unchanged.
K-Electric was the volume leader, gaining Rs0.42 to close at Rs5.83. It was followed by Unity Foods, which rose Rs0.75 to close at Rs26.89, and WorldCall Telecom, which added Rs0.05 to close at Rs1.42.
Foreign investors sold shares worth Rs271.6 million, according to the National Clearing Company.
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