After budget 2024-2025 announcement (PSX) saw a positive trend Stock prices went up by more than 1,700 points during the day.

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Karachi: 13 June 2024: On Thursday, after the government announced its budget for FY2024-25, the Pakistan Stock Exchange (PSX) saw a positive trend. Stock prices went up by more than 1,700 points during the day. The KSE-100 index rose by 1707.83 points, reaching 74,505.26 points at 10:49am, compared to the previous close of 72,797.43. According to Mohammed Sohail, CEO of Topline Securities, this increase was because the new budget didn't raise taxes on dividends and capital gains for investors.

Raza Jafri, CEO of EFG Hermes Pakistan, explained that the market reacted well to the budget's mild changes to taxes for those who file taxes, contrary to fears before the budget announcement. Jafri also mentioned that the market viewed positively the government's efforts to target non-tax filers, retailers, and real estate, though there are concerns about how effectively these measures will be enforced. Regarding the International Monetary Fund (IMF)'s response to the budget, Jafri believed it would find the budget acceptable.

However, he emphasized the need for the government to follow through with implementing and enforcing its plans. For the past few days, the stock market has been stressed due to concerns about big tax changes in the budget and directions from the IMF," said Shahab Farooq, a research director at Next Capital Limited.

"But the actual budget relieved those worries, and it had mostly positive effects," Farooq added. He believes the IMF will approve the budget, especially the efforts to increase the documentation of the economy by focusing on non-tax filers and the real estate sector.

Farooq mentioned that the outlook for the stock market, which was already low-priced, has gotten even better. Yousuf M Farooq, research director at Chase Securities, noted, "Rumors about increased taxes on capital gains and dividends had hit the market hard over the past two weeks, but the budget didn't include such increases, leading to a relief rally." He explained that the budget continues a policy of keeping spending tight, with a goal of having more money come in than go out, as the IMF requires.

Textile stocks went down because goods exports now have to pay normal taxes instead of a lower fixed rate. On the other hand, stocks related to construction went up because the budget has more money set aside for development projects and supportive measures for the steel industry.

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