KARACHI: The stock market witnessed a bullish run during the week, as certain developments lent impetus to the market leading the index to gain 400 points or 0.98% to settle at 41,320 levels.
Despite being open for just three working days on account of Ashura holidays the index managed to surpass the 41,000-point barrier. Monday kicked off on a bearish note as concerns regarding the twin deficits and lack of decisions to tackle them kept investors cautious. The impending announcements from the Economic Coordination Committee (ECC) meeting and the mini-budget also dampened sentiments. However, Tuesday brought a turn of event as the KSE-100 index surged over 700 points after the announcement of the revised Finance Bill.
News of increase in gas prices for domestic consumers of up to 143% also acted as a catalyst for the market. The government also approved increase in gas prices for commercial and industrial consumers from 30% to 57%. This development is particularly negative for sectors with higher cost contribution from gas such as chemicals, glass and ceramics etc. However, it came as a welcome for Sui companies as it will allow them to pass on the cost burden to end consumers, which has already reflected in market prices of SSGC (up 4.7% week-on-week) and SNGP (up 1.9% week-on-week).
The amended finance bill was a bag of mixed goods for the stock market. The removal of restrictions on non-filers for purchase of automobiles and increase in federal excise duty on imported cars of more than 1800cc proved to be positive for the auto sector. Subsidy for Punjab-based textiles was also seen as an encouraging move by the textile sectors. Meanwhile, increase in excise rates on cigarettes will negatively impact the sector.
Much of the gain was contributed by automobile assemblers and automobile parts and accessories (up 148 points). Auto stocks had taken a heavy beating during the year as concerns on economy and the said ban took its toll on the sector outlook.
Further, pharmaceutical sector helped the index gain 83 points to remain in green due to relief provided by the mini-budget announced by Finance Minister Asad Umar on the import of medical equipment. Scrip-wise, select stocks HCAR, (up 5%) and PSMC (up 5%) grabbed investors’ attention due to removal of ban on non-tax filers from buying motor vehicles.
Foreign investors remained net sellers of $12.6 million worth of shares during the week vs net selling of $26.1 million in the last week. On the local front, insurance companies and mutual funds were net buyers amounting to $4.1 million and $4.1 million, respectively. Selling was witnessed in banking ($4 million) and cement ($3 million) sectors.
Among major highlights of the week were; IMF team is due to visit on September 26, number of 3G, 4G users reached 58.56 million by August 2018, Edotco will not acquire PMCL towers, Pakistan to repay $2.52 billion loan mark-up in three months, Mari Petroleum found significant oil deposits and the SBP allowed up to $50,000 imports on lifesaving drugs.
Published in The Express Tribune, September 21st, 2018.