The market took a massive hit on Monday as the index dropped over 1,000 points in intra-day trading in anticipation of unveiling the Pakistan Economic Survey 2018-19. The negative sentiments were further fuelled as news of former president Asif Ali Zardari’s arrest made headlines. With investors remaining mostly on the sidelines due to the federal budget announcement, the index largely witnessed dull trading.
Market watch: Stocks gain slightly as budget anxiety restricts rally
The KSE-100 extended gains in the post-budget trading session as lower than expected taxes fuelled investor interest. As per the finance bill profits made on all other investment avenues (property market and debt securities) were subjected to higher taxes while CGT regime for the equity market was kept unchanged. Recovery was also seen in cement and steel sectors as the government raised the development budget for FY20. Although new taxes were proposed and some tax rates were increased, the developments were mostly in line with the news flows that had been doing the rounds ahead of the budget. Once it was over, a clearer picture of the economy emerged, which helped the index rally in the following two sessions.
Participation picked up slightly as average daily volumes for the outgoing week were up by 9% to 136 million shares while value traded increased by 8% to $34 million.
Contribution to the upside was led by fertiliser (up 181 points), cement (65 points), pharmaceuticals (33 points), and technology and communication (up 25 points). Scrip-wise major gainers were FFC (up 122 points), SEARL (37 points), ENGRO (37 points), OGDC (28 points), and TRG (24 points).
Market watch: KSE-100 extends gains in post-budget trading session
Foreign selling continued this week clocking-in at $4.9 million compared to a net sell of $2.3 million last week. Major selling was witnessed in exploration and production ($6.9 million) and all other sectors ($0.8 million). Meanwhile, on the local front, buying was reported by individuals ($2.8 million) followed by mutual funds ($2.7 million).
Among major highlights of the week were; economic growth to slow down to 2.4%: finance ministry, foreign exchange reserves held by the central bank dropped 0.7% to stand at $7.8 billion, car sales down 4.11% in 11 months, the rupee slid to its all-time low at Rs156 to the dollar in inter-bank market, and Shanghai Electric to finally acquire K-Electric this year.
Published in The Express Tribune, June 16th, 2019.
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