New budgetary measures trigger 1,134 point index collapse
As was expected after the raft of new measures announced in the federal budget on Friday and continuing uncertainty over the deal with global lenders, the Pakistan Stock Market (PSX) on Monday plummeted by over 1,134 points, or 2.7%, on Monday.
The market fell to 19 months low as investors lost over Rs178 billion in a single trading session.
The index opened on Monday at 42,069.65 points after a pre-budget week where it had gained around 700 points.
But with the new measures included in the budget including increased taxes on banks - complete with a super tax - and other fiscal measures by the government to further consolidate the economy, the market expectedly reacted negatively.
Read our in-depth coverage on budgets here.
The first half of the day saw the market hemorrhage around 1,033.05 points to hit a low of 40,981.68 points - down by about 2.46%.
Insurance and Modarba companies led the decline with The Universal Insurance Company down Rs4 (13.98%), followed by First Elite Capital Modarba at Rs2.71 (13.69%), Sindh Modarba by Rs7.30 (8.75%), First UDL Modaraba was down Rs6.41 (8.43%), First Prudential Modaraba was down Rs1.57 (8.19%) in the first half.
Shaheen Insurance Company Limited went down Rs0.61 a share (14.88%), First Paramount Modaraba down Re1 (10.11%), and The United Insurance Company down Rs0.19 per share (2.52%) were among the companies who saw the most decline in the first session.
Read this week’s Market Note here.
The market failed to recover in the second half of the trading session. Uniliver Foods and Sapphire were the top decliners.
In another sign of how budget proposals affect the stocks, Al-Ghazi Tractor and Millat Tractors turned out to be the highest advances in the market after the government slashed taxes on tractors.