Market Review Reveals Weekly Decline Amid Tax Concerns and Monetary Speculations

Karachi, The stock market experienced a lackluster performance this past week, with the benchmark index dropping 2,124 points, a 2.8% decrease, closing at 73,754 points on Friday. The decline was influenced by concerns over potential changes in tax regulations and statements from Moody’s regarding the monetary policy committee.

According to AKD Securities Limited, the market downturn was primarily driven by the potential realignment of the capital gains tax (CGT) and dividends tax rates to match the normal income tax rate. Additionally, Moody’s indication that the status quo might be maintained in the upcoming monetary policy committee meeting also pressured the market. These factors overshadowed several positive economic indicators observed during the week.

On the macroeconomic front, inflation for May 2024 fell to a 30-month low at 11.8% year-over-year, which bolstered market expectations for possible rate cuts in the upcoming June 10th MPC meeting. The easing monetary policies in major economies like the European Central Bank and the Bank of Canada further fueled this optimism. Moreover, a 15% month-over-month reduction in May’s trade deficit to $2.1 billion and record-high remittance inflows of $3.2 billion suggested a potential current account surplus, enhancing expectations for the fiscal year’s close in surplus.

Despite these positive developments, the market faced volatility, and overall participation decreased by 5.3% from the previous week, with average daily traded volume dropping to 423 million shares. The Pakistani Rupee saw a slight appreciation of 0.05% week-over-week, closing at 278.2 against the US dollar. Sector performance varied, with Paper & Board, Jute, and Textile Spinning seeing gains, whereas Investment Banks/Securities Companies, Exploration & Production, and Refinery sectors faced declines.