Market watch: KSE-100 surges over 700 points on mini-budget announcement

Benchmark index rises 717.6 points or 1.77% to settle at 41,238.07

KARACHI: The Pakistan Stock Exchange (PSX) recorded on Tuesday a bullish rally on across-the-board buying after the government announced much-awaited economic measures through the revised Finance Bill 2018.

At the start of trading, the index showed minor fluctuations and started climbing by the second half, gaining 749.96 points in intra-day trading.

“Announcement of much-awaited amendments to the finance bill sparked the rally,” Topline Securities’ analyst Nabeel Khursheed said in comments to The Express Tribune.

The government has withdrawn the condition of being a tax return filer for buying a new car and high-value property. The relief triggered buying euphoria in related sectors such as cement and steel, he said.

Food, chemical, cement, IT and telecom and textile stocks led the rally and they were the most traded stocks during the day.



“The rally may, however, be short-lived,” the analyst cautioned.

The new measures may not give a boost to the economy immediately. It may prompt traders to sell stocks at higher prices. “The economy is likely to return to growth trajectory next year,” he added.

At close, the benchmark KSE 100-share Index recorded an increase of 717.60 points or 1.77% to settle at 41,238.07.

JS Research analyst Maaz Mulla said the market recovered as the KSE-100 index gained 718 points, after a decline of 400 points in the previous trading session.

He said the recovery came after the amended finance bill for the remaining months of FY19 was read out during Tuesday’s session of the National Assembly.

“Key highlights of the mini-budget were increase in federal excise duty on imports of luxury items including vehicles and expensive cellphones. Customs duty was increased on more than 5,000 luxury items while regulatory duty was increased on the import of more than 900 items,” he added.

Tax relief was withdrawn for salaried persons earning more than Rs200,000 per month, the analyst said and added tax rate for the highest income slab was raised from 15% to 30%.

Buying was largely driven by value hunters with cement and steel heavyweights Lucky Cement (+5%), DG Khan Cement (+5%), Maple Leaf Cement (+5%), Pioneer Cement (+5%), International Steels (+5%) and Amreli Steels (+2.29%) leading the chart, cumulatively contributing 128 points to the index.



Active participation was witnessed in the banking sector with United Bank (+1.68%), Habib Bank (+1.55%), Bank Alfalah (+2.21%) and National Bank (+1.44%) closing in the green zone.

Pakistan Petroleum (+1.80%) from the exploration and production sector declared its FY18 result, where the company posted earnings per share of Rs23.24 and cash payout of Rs1.50 per share along with 15% bonus shares.

“Moving forward, we expect the market to remain positive in the coming session where we recommend investors to buy value stocks on dips,” the analyst added.

Overall, trading volumes increased to 166.5 million shares compared with Monday’s tally of 145.2 million. The value of shares traded during the day was Rs7.5 billion.

Shares of 382 companies were traded. At the end of the day, 287 stocks closed higher, 68 declined and 27 remained unchanged.

Lotte Chemical was the volume leader with 13.2 million shares, gaining Rs0.49 to close at Rs14.7. It was followed by Unity Foods with 10.4 million shares, gaining Rs1.72 to close at Rs36.24 and Maple Leaf Cement Factory with 9.5 million shares, gaining Rs2.33 to close at Rs49.09.

Foreign institutional investors were net sellers of Rs779.2 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.