The equity market concluded in negative territory on Thursday, as investor caution overshadowed a positive start to the session. Ahead of the federal budget and uncertainty surrounding IMF-linked fiscal reforms, profit-taking emerged, pulling the index into the red by session’s end.
“Budget jitters are causing people to remain on the sidelines and book profits,” stated Ahfaz Mustafa, CEO of Ismail Iqbal Securities, highlighting mounting investor nervousness as budget negotiations continue.
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index settled at 119,153.04 points, marking a decline of 778.41 points, or -0.65%, from its previous close of 119,931.45.
The index had initially surged to a new intraday high of 120,699.17, gaining 767.72 points (0.64%), before retreating to a low of 119,062.03, down 869.42 points (-0.72%).
“It’s a continuation of the rally post relief from the Indo-Pak war,” commented AAH Soomro, an independent investment and economic analyst. He added, “The market overall remains attractive with more investors deploying funds consistently.”
“Agreement with IMF on the budget is likely to give impetus to growth sector stocks and continue bull run eventually towards 150,000 in a year,” he projected.
Investor confidence had been buoyed this week after Pakistan’s nominal GDP crossed the $400 billion mark for the first time, according to provisional estimates approved by the National Accounts Committee (NAC).
The economy’s size has expanded to Rs114.7 trillion ($411 billion) in FY25, an increase from Rs105.1 trillion ($372 billion) in the previous fiscal year. The NAC also reported a GDP growth of 2.68% for the current fiscal year, with quarterly revisions showing growth of 1.37% in Q1 and 1.53% in Q2, although this remains below the government’s initial 3.6% target.
Meanwhile, budget negotiations between the government and the International Monetary Fund (IMF) are ongoing. The IMF is pressing for higher taxation on agriculture-related inputs, including an increase in Federal Excise Duty (FED) on fertilizers from 5% to 10% and the introduction of a 5% tax on pesticides.
Prime Minister Shehbaz Sharif is reportedly urging the Fund to reconsider these proposals, citing the potential strain such measures could place on the farming sector.
The IMF is also advocating for the implementation of Agriculture Income Tax (AIT) starting July 1, 2025, and pushing for broader tax base reforms, including uniform turnover thresholds for income and GST registration.
Preliminary projections suggest AIT could raise Rs40–50 billion in the short term from provincial collections.
Key Information Summary:
- KSE-100 Index: Closed at 119,153.04 points, down 0.65%.
- Market Sentiment: Investor caution, profit-taking, driven by federal budget uncertainty and IMF-linked fiscal reforms.
- Investor Confidence Boost: Pakistan’s nominal GDP surpassed $400 billion for the first time, reaching $411 billion in FY25.
- FY25 GDP Growth: Provisional estimate of 2.68%, falling short of the government’s 3.6% target.
- IMF Demands for Budget: Higher taxes on agricultural inputs (increased FED on fertilizers, 5% tax on pesticides), implementation of Agricultural Income Tax (AIT) from July 1, 2025, and broader tax base reforms.
- Government’s Stance: PM Shehbaz Sharif is reportedly urging the IMF to reconsider agricultural tax proposals due to concerns about the farming sector.
