- Index finishes near 41,900 level as investors also brush off imposition of 'super tax'
In a dramatic turn of events, Pakistan stocks staged a rally on Monday with the benchmark KSE-100 Index gaining 2.01% as a host of positive triggers revived investor sentiment.
The rise comes after the KSE-100 plummeted 1,665.18 points or 3.9% on Friday after the government imposed a ‘super tax’ on 13 sectors with index-heavy listed companies coming under the taxation hammer.
However, on Monday, investor-sentiment revived after it was reported that the International Monetary Fund (IMF) will send a draft of the Memorandum of Economic and Financial Policies (MEFP) today, which will indicate that the two parties have reached an agreement. This drove optimism at the equity market.
At close, the KSE-100 index settled at 41,878.57 points after an increase of 826.78 points, or 2.01%.
The government wants to conclude an agreement with the IMF for revival of the $6 billion program before approval of Federal Budget 2022-23.
The market also jumped as investors brushed off negativity emerging from imposition of super tax on Friday after it emerged that the levy will be a one-off.
Prime Minister Shehbaz Sharif announced on Friday a 10% poverty alleviation tax or super tax on large industries in a “bid to relieve the general public of tax pressures”.
The tax will be applicable on cement, steel, sugar, oil and gas, fertiliser, LNG, textile, banks, automobile, beverages, chemicals, tobacco and airline sectors.
“This tax is a one-time levy and it will only be applicable for fiscal year 2022-23,” Finance Minister Miftah Ismail said.
“The market remains confident that the global lender will resume the $6 billion bailout programme,” Fahad Rauf, Head of Research at Ismail Iqbal Securities, told Business Recorder.
“Moreover, Pakistan also expects good news related to an oil facility from Saudi Arabia as Chief of Army Staff Qamar Javed Bajwa is on a visit to the Middle Eastern nation.”
He added that the market witnessed a knee-jerk reaction on Friday on the back of the imposition of the super tax.
A report from Topline Securities also highlighted that Pakistan equities commenced the week on a positive note on the backdrop of arrival of Chinese funds of $2.3 billion over the weekend, progress on resumption of IMF programme and window dressing factor ahead of fiscal year end.
Sectors driving the benchmark KSE-100 index north included banking (182.17 points), fertiliser (96.84 points) and cement (93.30 points).
Volume on the all-share index declined to 247.9 million from 424.2 million on Friday. The value of shares traded decreased to Rs7.38 billion from Rs12.8 billion recorded in the previous session.
K-Electric was the volume leader with 32.04 million shares, followed by Treet Corporation with 19.93 million shares, and Unity Foods Limited with 14.4 million shares.
Shares of 333 companies were traded on Monday, of which 228 registered an increase, 90 recorded a fall, and 15 remained unchanged.