Market Watch: Bourse fails to lift off despite friendly budget

Decline in regional peers, foreign selling pull market down.


Our Correspondent June 05, 2012

KARACHI:


Despite the budget being pro-capital markets, the stock market still fell on the first trading session of the week amid decline in regional markets.


The Karachi Stock Exchange’s (KSE) benchmark 100-share index fell 0.86 per cent or 119.06 points to end at the 13,757.91 point level.

Finance Amendment Ordinance 2012 is now a part of Finance Bill 2012 which includes the rules for computation of Capital Gains Tax (CGT) and incentives to increase investment at the bourse.

Oil stocks led the drop as global prices stayed below the $100 mark – a level not seen for eight months – for the second straight session and kept investors in the selling mode, said JS Global Capital analyst Shakir Padela. Pakistan Oilfields closed the day down 1.8% at Rs365.37 while Oil & Gas Development Company and Pakistan Petroleum declined 1.6% and 2.2%, respectively.

Foreigners were net sellers of Rs641 million amid global fallout during the trading session, according to data maintained by the National Clearing Company of Pakistan Limited.

Trade volumes fell to 95.7 million shares compared with Friday’s tally of 107 million shares. The value of shares traded during the day was Rs3.29 billion.

Fertilizer sector, virtually the only sector that was negatively impacted from the budget, closed down amid increase in the price it pays for gas.

Fauji Fertilizer and Fauji Fertilizer Bin Qasim both closed down 1.5%, respectively. Fatima Fertilizer on the other hand closed the day up by 2% as they are immune to any increase and receive gas at a fixed price for being a new player in the industry.

Falling international oil prices coupled with slowing economies worldwide will keep KSE in check. Any positive international news flow should be taken an opportunity to accumulate for the upcoming result season.

Cement manufacturers, that saw a relief of Rs100 per ton in taxes in the budget – also closed negative possibly because the market had earlier bet on a higher tax cut.

Lafarge Pakistan was the volume leader with 928 million shares declining Rs0.03 to finish at Rs4.81. It was followed by Fatima Fertilizer with 8.86 million shares firming Rs0.49 to close at Rs24.93 and DG Khan Cement with 8.31 million shares declining Rs0.74 to close at Rs41.87.

Published in The Express Tribune, June 5th, 2012.

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