Despite pre-budget jitters, PSX ends in green

KSE-100 index inched up 93 points as investors remained cautiously optimistic

KARACHI:

Volatility marred the outgoing week at the Pakistan Stock Exchange (PSX) as sharp ups and downs punctuated the daily trading session amid uncertainty stemming from budget announcement.

The benchmark KSE-100 index, however, finished the fifth successive week in the green with a marginal rise of 93.02 points or 0.2% to close at 48,304.72.

“Even though investor participation declined marginally during the week, it was by no means unhealthy,” said JS Global analyst Ali H Zaidi.

Taking cue from last week’s close, trading kicked off on a positive note on Monday as upbeat news about Pakistan’s stance on all issues related to the Financial Action Task Force’s (FATF) grey list coupled with payment of circular debt instalment to independent power producers (IPPs) strengthened investors’ confidence.

Read: With CGT cut, PSX gets major boost

Unfortunately, bulls took a break from the capital market as the levy of global minimum tax on technology giants weighed on investors’ sentiment.

The Group of Seven (G7) countries reached a landmark deal earlier during the week, requiring the global technology companies to pay a minimum 15% tax. Moreover, a dip in global crude oil prices affected the local oil sectors.

Discussion with the International Monetary Fund (IMF) on budget proposals and pre-budget jitters prevented investors from taking fresh positions.

However, encouraging numbers of remittances, which stayed above $2 billion for the 12th consecutive month, and release of Pakistan Economic Survey 2020-21 sparked optimism and helped the market shed the gloom of last two days on Thursday.

Expectation of a people-friendly and a growth-oriented budget for fiscal year 2021-22 fuelled the uptrend. The last day of trading remained cautious as investors weighed moves ahead of budget announcement.

Finance Minister Shaukat Tarin unveiled the budget during the trading hours and the market reacted positively till the close. News of 4% growth and V-shaped recovery boosted participants’ confidence.

Complete reaction on reduction in capital gains tax and elimination of withholding tax will provide the much-needed support to the market in the next fiscal year.

During the outgoing week, despite falling below 48,000-point mark the market recovered quickly and reclaimed the mark. The government and analysts expect the market to breach 55,000-point mark by the end of 2021.

Average daily traded volume declined 3.8% week-on-week to 1.08 million shares while average daily traded value dropped 15.8% week-on-week to $161.9 million.

In terms of sectors, positive contributions came from refinery (2.1%), food (1.9%), chemicals (1.1%), power (1.1%), textile composites (0.4%) and autos (0.2%).

Read more: PSX to maintain growth trend

Meanwhile, the sectors that contributed negatively included exploration and production (3.2%), oil and gas marketing companies (2.5%), engineering (1.4%), fertiliser (1.1%), pharmaceuticals (0.8%) and cement (0.4%).

Scrip-wise, major gainers were Pakistan Telecommunication Company (16.7%), Unity Foods (7.8%), Century Paper and Board Mills (6.3%), Indus Motor Company (6.3%), Systems Limited (5.5%) and Dolmen City REIT (5.4%).

On the contrary, negative contributors were Gul Ahmed Textile Mills (13.6%), International Industries (6.7%), TRG Pakistan (5%), Oil and Gas Development Company (4.9%), Atlas Honda (4.5%), AGP Limited (4.2%) and Pakistan State Oil (4.2%).

Among other major news of the week; cumulative inflows in Roshan Digital Accounts reached $1.25 billion, workers remittances increased 34% year-on-year to $2.5 billion in May, trade deficit widened by 30.6% year-on-year to $27.49 billion in 11MFY21 and foreign exchange reserves with the SBP rose $281 million to $16.4 billion.

Published in The Express Tribune, June 13^h, 2021.

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