Stocks hit 27-month high before closing flat
Market surges on first day but tax issues drag it down rest of the week.
KARACHI:
The stock market ended the week marginally down by 0.1 per cent after hitting a 27-month high at 11,047 points on the first day of trade.
The market saw enthusiasm at the start of the week on Monday with volumes hitting a six-month high and the index crossing the 11,000-point barrier. However, the bourse reversed the positive trend in the second half of the week mainly because of concerns over the government’s decision to impose reformed general sales tax (RGST) and flood surcharge.
As a result, volumes on the last two sessions averaged 111 million shares compared to the first two days which saw an average turnover of 221 million shares. For the week, average volumes were 35 per cent higher at 166 million shares.
The government tabled for parliament’s approval a raft of taxation measures to ease financial strain and meet IMF conditions for release of the pending $1.3 billion tranche. The measures included implementation of reformed GST, a 10 per cent flood surcharge and an increase in special excise duty to two per cent from one per cent. Moreover, the approaching Eid holidays also caused some slowdown in activity – a traditional phenomenon.
The domestic market’s fall was in line with Asian markets, said Topline Securities equity dealer Samar Iqbal on Thursday. Global capital markets including China fell later in the week.
Foreign inflows in the domestic market fell to $9 million from last week’s $13 million.
News flow
During the week under review, major economic data for October was released, with the Consumer Price Index – the prime indicator of inflation – rising 15.33 per cent while trade deficit narrowed by 11.7 per cent to $1.3 billion on a yearly basis as exports grew by a healthy 26 per cent to $2 billion.
Remittances worth $855 million flowed in October.
Outlook
Next week is expected to be slow with only two working days on account of Eidul Azha. However, based on the reforms agenda presented in parliament, Pakistan expects to receive the IMF loan tranche by the end of current month which could potentially act as a key trigger in the market.
Conclusion of the ongoing G20 summit will also trigger the market. We have already seen China disclosing its intentions to increase interest rates which should not only cool down its industrial demand but will also have a significant impact on global commodity and capital markets.
Thus, any continuity in decline in global commodities and equities will eventually have an impact on Pakistan’s equities.
Published in The Express Tribune, November 14th, 2010.
The stock market ended the week marginally down by 0.1 per cent after hitting a 27-month high at 11,047 points on the first day of trade.
The market saw enthusiasm at the start of the week on Monday with volumes hitting a six-month high and the index crossing the 11,000-point barrier. However, the bourse reversed the positive trend in the second half of the week mainly because of concerns over the government’s decision to impose reformed general sales tax (RGST) and flood surcharge.
As a result, volumes on the last two sessions averaged 111 million shares compared to the first two days which saw an average turnover of 221 million shares. For the week, average volumes were 35 per cent higher at 166 million shares.
The government tabled for parliament’s approval a raft of taxation measures to ease financial strain and meet IMF conditions for release of the pending $1.3 billion tranche. The measures included implementation of reformed GST, a 10 per cent flood surcharge and an increase in special excise duty to two per cent from one per cent. Moreover, the approaching Eid holidays also caused some slowdown in activity – a traditional phenomenon.
The domestic market’s fall was in line with Asian markets, said Topline Securities equity dealer Samar Iqbal on Thursday. Global capital markets including China fell later in the week.
Foreign inflows in the domestic market fell to $9 million from last week’s $13 million.
News flow
During the week under review, major economic data for October was released, with the Consumer Price Index – the prime indicator of inflation – rising 15.33 per cent while trade deficit narrowed by 11.7 per cent to $1.3 billion on a yearly basis as exports grew by a healthy 26 per cent to $2 billion.
Remittances worth $855 million flowed in October.
Outlook
Next week is expected to be slow with only two working days on account of Eidul Azha. However, based on the reforms agenda presented in parliament, Pakistan expects to receive the IMF loan tranche by the end of current month which could potentially act as a key trigger in the market.
Conclusion of the ongoing G20 summit will also trigger the market. We have already seen China disclosing its intentions to increase interest rates which should not only cool down its industrial demand but will also have a significant impact on global commodity and capital markets.
Thus, any continuity in decline in global commodities and equities will eventually have an impact on Pakistan’s equities.
Published in The Express Tribune, November 14th, 2010.