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KSE-100 index plunges over 650 points on fears of monetary tightening

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  • KSE-100 index closes at 42,440.25 after losing 1.53%.
  • Delay in tough economic decisions and political uncertainty have unnerved investors.
  • Shares of 314 companies were traded during the session.

KARACHI: The benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) plunged on Monday, the first day of the rollover week, as an across-the-board selling spree pushed share prices into the red zone.

The delay in tough economic decisions by the coalition government and heightened political uncertainty has unnerved investors. Moreover, the Pakistani rupee remains in a downward spiral with the US dollar gaining another 0.39% on Monday to close at 200.93.

The index remained jittery over concerns regarding monetary policy tightening which was to be announced after the session.

It is worth mentioning that contrary to market expectations the State Bank of Pakistan (SBP) raised the benchmark interest rate by 150 basis points to 13.75% for the next six weeks in order to stabilise inflation and economic growth.

Moreover, uncertainty regarding the ongoing talks between Pakistan and the International Monetary Fund (IMF) mission for the revival of the stalled multibillion-dollar programme took a toll on the market.

At close, the benchmark KSE-100 index closed at 42,440.25 after losing 660.46 points or 1.53%.

A report from Arif Habib Limited noted that the market witnessed a bloodbath session as investors remained bearish throughout the day.

“The benchmark KSE-100 index nosedived from the beginning of the session as an increase in the political noise over the weekend and uncertainty regarding resumption of IMF programme along with continued depreciation of Pakistani rupee against the US dollar and rate hike in the Monetary policy, shattered investors’ confidence,” the report noted.

The brokerage house noted that the volumes remained dull on the mainboard although hefty volumes were observed in third-tier stocks.

Sectors contributing to the performance included cement (-120.8 points), fertiliser (-89 points), exploration and production (-79.9 points), technology (-72.5 points), and banks (-63.1 points)

Shares of 314 companies were traded during the session. At the close of trading, 48 scrips closed in the green, 250 in the red, and 16 remained unchanged.

Overall trading volumes rose to 118.98 million shares compared with Friday’s tally of 189.92 million. The value of shares traded during the day was Rs3.57 billion.

Silk Bank was the volume leader with 9.97 million shares traded, gaining Rs0.04 to close at Rs1.32. It was followed by WorldCall Telecom with 7.62 million shares traded, losing Rs0.09 to close at Rs1.50 and K-Electric with 6.12 million shares traded, losing Rs0.08 to close at Rs2.50.

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Bulls Reenter PSX: The KSE-100 Rises More Than 886 Points

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As the market surged more than 800 points in the early morning trade, bulls grabbed control at the Pakistan Stock Exchange.

During the first trading session, the benchmark KSE-100 index increased by 886 points to 61,350.48 points.

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Pakistan’s steel prices are rising; get the latest figures here

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Another increase in steel prices has resulted in higher construction expenses in Pakistan. The economic downturn and continuous shipping delays have resulted in sharp price increases for building supplies, which has an effect on those who are planning to construct homes.

Due to increased manufacturing costs and supply chain interruptions brought on by the Middle East crisis, the price of iron, commonly known as steel rebar, has increased by Rs5,000 per ton. Local and imported steel rebar now costs between Rs240,000 and Rs260,000 per ton as a result of this most recent rise.

The cost of branded iron went from Rs255,000 to Rs260,000 per ton, while the cost of local iron climbed from Rs236,000 to Rs240,000. Furthermore, the cost of scrap or unprocessed iron has increased to Rs160,000 per ton inin the iron and steel markets.

The impact of the skyrocketing steel prices will be exacerbated by any more interruptions in the raw material supply chain. The cost of cement, on the other hand, has somewhat decreased and is at Rs 1,246 per bag.

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Up 30% to Rs 5.1 trillion by mid-February, FBR collected

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The total increase in domestic taxes has been around 40%, whilst import duties and associated levies increased by 16% between July 2023 and January 2024.

With the recovery of the GDP and increased inspection of FBR collection, the growth in revenues accelerated.

Up to mid-February, FBR receipts increased by 30% to Rs. 5.1 trillion. Nevertheless, decreases in import tariffs over time and, more recently, import license limits implemented by the State Bank of Pakistan (SBP) to manage the country’s balance of payments in the aftermath of foreign exchange shortages, were mostly responsible for the decline in the rise of import taxes.

However, the impact of improvements in import valuation, which resulted in collections of Rs 151 billion, as well as the anti-smuggling campaign, which saw a surge of about 69% in the current fiscal year over the previous one, are also included in the income collected from imports.

The statement said that there was room to improve anti-smuggling operations by considering expanding Baluchistan’s customs force, which now only has 378 anti-smuggling employees out of 20,000 total.

The mobilization of domestic tax income, which accounted for more than 64% of all revenues received in the current fiscal year, was hailed in the statement as a welcome change.

In parallel, the percentage of import duties has decreased to 36% from over 50% just three years prior. The main drivers of this increase in revenue were the several taxes sources. From Rs. 1,751 billion to Rs. 2,447 billion, income tax receipts increased significantly—by 40%.

Banks, the petroleum and oil lubricants (POL) business, the textile industry, the electricity sector, the food industry, and a number of service industries were among the major income tax payers. Up to mid-February, FBR receipts increased by 30% to Rs. 5.1 trillion. Notable rise was also seen in sales tax receipts, which increased by 19% from Rs. 1,480 billion to Rs. 1,766 billion.

POL, the electricity sector, the food sector, the automobile sector, the iron and steel sector, and the chemical sector were important growth drivers.

The amount collected in federal excise taxes increased significantly by 61%, from Rs. 190 billion to Rs. 307 billion.

Taxes on tobacco goods, the cement industry, drinks, airlines, fertilizers, and the automobile sector were the main causes of this increase. The amount collected in customs duties increased by 14%, from Rs. 552 billion to Rs. 629 billion.

The POL, automobile, iron and steel, electronics, and food industries were among the main donors to customs duties.

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