Market Watch: Budget jitters end, cement and textile sectors shine

Benchmark 100-share index gains 138.62 points.

KARACHI: As expected, the Karachi Stock Exchange (KSE)-100 index generated more activity with cement and textile sectors rallying after earning enough incentives in the federal budget announcement.

The change in tax structure for commercial banks took its toll as leading financial institutions declined, with investors remaining mainly weary.

At close, the index rose 0.41% or 138.62 points to end at 34,151.11.



Elixir Securities analyst Faisal Bilwani said Pakistan equities opened gap down and lost near 2.6% at the open after the budget brought a few surprises for equity investors. “Early panic was primarily on hike in Capital Gains Tax (CGT), increase in holding period to as long as four years before CGT exemptions and one-time tax surcharge to all corporate earnings over Rs500 million,” said Bilwani. “Banks mostly traded at lower price limits after changes in tax structure that will dent bottom line.

“Most bluechips showed exceptional resilience and bounced to initially cover morning losses followed by gains that pushed stocks in the green as fresh liquidity found its way at weakness.

“Cements including Lucky Cement (LUCK), Maple Leaf (MLCF) and DG Khan Cement (DGKC) hit the upper price limits on excitement over higher public spending allocation and pro-growth strategy outlook by the government.

“Volumes and turnover were sharply up with reports of foreigner’s activity in index names while retail investors enjoyed the surprise rally and focused on small and middle caps.”



Meanwhile, an analyst at Topline securities said that the index witnessed a highly volatile session with above average volumes.

“Announcement of a textile package and reduction in ERR (Export Refinance Rate) brought renewed interest in the sector,” said the analyst.

Trading volume increased to 449 million shares compared to 333 million on Friday. The value of shares traded during the day was Rs21 billion.

Shares of 387 companies were traded on Monday. Of these, 228 companies closed higher, 139 fell and 20 remained unchanged.

Fauiji Cement was the volume leader with 28.8 million shares, gaining Rs1.72 to close at Rs36.21. It was followed by K-Electric Limited with 25.8 million shares, losing Rs0.09 to close at Rs8.02 and Dewan Cement with 24.8 million shares, gaining Rs0.95 to close at Rs9.45.

Foreign institutional investors were net buyers of Rs54 million worth of shares during the session, according to data compiled by the National Clearing Company of Pakistan.

Published in The Express Tribune, June 9^th, 2015.

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