Budget proposals viewed as positive for stock market

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KARACHI: The federal budget for the financial year 26 has been welcomed by the capital markets. The brokers and analysts said that through aligning with stable taxes on equality, targeted disinf which to invest loans, and alignment with the IMF financial standards, these proposals are expected to provide stable and growth -based backgrounds for investors in the coming year.

The federal government has unveiled its second budget, in which the cost of Rs 19.3 trillion and Rs 25.8 trillion has been presented for the financial year 2025-26. As a result, Rs 6.5 trillion, or 5.0 % of GDP is a federal fiscal deficit. Overall, the country’s deficit is estimated at Rs 5 trillion (3.9 % of GDP), which shows that provincial governments will need to create a distance of Rs 1.5 trillion more than Rs 1 trillion expected in FY 25.

Market stakeholders have generally welcomed budget proposals, especially those that affect capital markets. The Pakistan Stock Brokers Association described the financial project as a positive development for the stock market.

Bilal Farooq Zardi, CEO of the Pakistan Stock Brokers Association noted, while some of the economic activities, especially for non -tax filers, could affect the transactions in securities, especially for non -tax filers,

The government should work closely with brokers and other stakeholders. “We urge the FBR to explain the clear limits and harmonize with the association so that implementation is effective without causing a major obstacle,” he said.

Zardi added that the Capital Guinness Tax (CGT) changed on equality at 15 % makes the Equity an attractive option, especially contrary to the increasing tax on interest revenue. “There is no change in tax on equity, and such consistency is a positive signal for investors,” he said. “Fixed Income Funds further encourages the stock market to increase the investment flow in the stock market, with a 15 percent increase in the fund tax, while keeping equity -based investment at 15 %.”

He said the budget was positive for the market and is associated with the PSBA proposal to maintain a permanent tax in the capital market.

Director Research in AKD Securities, Mohammad Aus Ashraf, echoed these views. He said, “The budget is conducive to the stock market.” The tax on revenue from loan equipment has increased from 15 % to 20 %, and the tax rate on the profits of the equity mutual fund will be reduced by 15 %, potentially changing the interest of investors towards equality. “

Ashraf also noted that the government’s revenue goals appear to be realistic and that tax reforms and sales tax exemptions are helped to rationalize them. “Although the salary tax and super tax decline is modest, it indicates the start of financing,” he added, adding that as a supportive factor, identifying important relief by reducing interest costs.

In addition, he said, providing funds to deal with circular loans is a positive development for the entire energy China, especially for PSOs, SNGP and E&P companies. “The availability of these funds will not only enable these companies to increase capital costs but will also improve the chances of profit payment,” he said.

Topline securities have also termed the budget as positive for the stock market. “Contrary to some expectations, the government has maintained a tax rate on the capital’s profit and profit, which we believe is conducive to the sentiments of investors,” Brookridge said in a note. “In addition, targeting the basic addition of 2.4 percent of GDP is alignment with the IMF benchmark, which is another encouraging sign.”

Brokerage highlights several other budget measures that are likely to support market performance: Section 114C Introduction: New section in the Finance Bill proposes restrictions on non -filers, such as registering limits on the purchase of securities above the set limit or registering high -capacity vehicles. The move is expected to encourage tax compliance and will formally increase the economy.

FATA/PATA tax exemption was removed: Sales tax exemption for industries in FATA and pita areas has been canceled. For the next three years, 10 % GST has been implemented, with an annual increase of 200 twenty -two points. This change is welcomed by businesses from other regions that have faced competition with non -hexified products, especially in the fields of steel and edible oils.

Construction sector incentives: 7.0 % of the feed and 150 points deducted in advance tax on immovable property is expected to benefit the construction sector and its affiliated industries.

Super tax reduction: Super tax has decreased by 0.5 % for income brackets between 2000 million and Rs 500 million, which analysts believe will help corporate profit and stock prices.

The important thing is that the budget does not change the capital gains tax or dividend tax on stock. Similarly, there is no new tax on the bonus shares, there is no change in the turnover tax, and there are no steps to target the maintained income. These factors are seen as neutral or slightly positive for the market.

Topline Securities added that the proposed budget, if passed, can help reclaim the market price (PE) from the current 5.2X to 7x. The note states that “subject to the successful passage and the IMF’s continued engagement, we maintain our base -index target of 127,000 for December 2025. With high liquidity and stability, the KSE 100 Index can also exceed 150,000.”