KARACHI: The stock market turned in another depressed performance in the outgoing week, as the benchmark KSE 100 index settled below the 74,000 level due to uncertainty about the upcoming taxation proposals and rising political noise.

The market turned bearish from the first session and remained negative until the last session. Investors chose to take profits at available margins due to a depressed economic outlook, anticipating tough budgetary measures with the unveiling of the budget on June 12, given conditions set by the International Monetary Fund for reaching a Staff-Level Agreement for a new Extended Fund Facility.

Arif Habib Ltd (AHL) said the market experienced a substantial plunge due to fears of a potential significant increase in capital gains tax (CGT) or dividend income tax in the budget 2024-25. The market remained negative despite positive economic developments. The CPI-based inflation for May slowed to 11.8 per cent year-on-year, the lowest since November 2021, from 17.3pc in April, but the State Bank ofPakistan remained cautious about any massive reduction in its policy rate.

Furthermore, the trade deficit increased by a meagre 0.1pc year-onyear, clocking in at $2.1bn during May.

Moreover, tax collection increased year-on-year by 33pc to Rs760 billion in May against the revised target of Rs745bn. Additionally, petrol and diesel prices declined by Rs4.74 and Rs3.89 per litre. The State Bank of Pakistan`s foreign exchange reserves witnessed a meagre rise of $16m to $9.1bn in the week ending on May 31.

Furthermore, the local currency gained Rs0.13 or 0.05pc against the US dollar to Rs278.2 week-on-week.

As a result, the benchmark KSE-100 index declined by 2,124 points or 2.80pc to 73,754.02 points week-on-week.

Sector-wise negative contributions came from commercial banks (788 points), OMCs (497 points), fertiliser (270 points), technology and communication (125 points) and power generation and distribution (120 points).

Meanwhile, the sectors that mainly contributed positively were automobile assemblers (59 points), pharmaceuticals (19 points) and automobile parts and accessories (6 points). Scrip-wise negative contributors were Meezan Bank (227 points), OGDC (199 points), Habib Bank Ltd (133 points), Systems Ltd (125 points) and Mari Petroleum (122 points). Meanwhile, scrip-wise positive contributions came from Millat Tractors Ltd (67 points), Lucky Cement (34 points), TRG Pakistan (21 points), The Searle (13 points) and Shell Pakistan (10 points).

Foreign buying was witnessed during the week, clocking in at $4.4 million compared to a net buy of $5.5m last week. Aggressive buying was seen in commercial banks ($3.4m) and `all other sectors` ($0.98m). The average trading volume fell 5.3pc to 423m shares while the average value traded settled up 0.4pc to $61.7m week-onweek.

According to AKD Securities Ltd, the monetary policy meeting on June 10 would be in the spotlight, with any rate cut expected to shift the market`s focus towards cyclical sectors.

Additionally, the federal budget would significantly influence investor sentiment. Given the prevailing uncertainties, the market will likely remain volatile in the short run, with clarity expected to emerge after the budget announcement.