Stocks Manage Modest Gains During Budget Week – Journal
KARACHI: The stock run went from a gallop to a trot in the outgoing week, with the KSE-100 index managing to climb just 93 points, or 0.2%, and came in at 48,304 .
Over the previous week, the index had posted massive gains of 1,085 points, or 2.3%, and topped 48,000 resistances for the first time in four years.
With the market digesting all the positive news regarding politics, improving macroeconomic numbers, and declining positive Covid-19 cases, the market exhibited volatile behavior during the outgoing week.
During the week, the market moved in line with news regarding the content of the Federal Budget FY22 which was announced on Friday. During the week, the government finally cleared Rs89 billion at 20 PPIs, although this hardly helped to brighten up the power sector.
Market watchers have said that investor sentiment on the economic survey report is surprisingly healthy; the focus on the FY22 budget and relaxed foreclosure recommendations led the market on an upward trajectory. The index hit highs and lows of 48,303 points and 47,778 points during the week.
Net sales by foreigners continued for the second week, with exits mostly seen in exploration and production, banks and other index stocks. Mutual funds handpick before the budget. Individuals continued to engage in low-cost stocks.
Average daily trade volume fell 3.8% week-over-week to 1.079 billion shares, while average daily trade value fell 15.2% to $ 162 million.
The top 10 positive contributors to the index include Engro Fertilisers; Systems Ltd; Unit foods; Fauji Foundation; CTP; Habib Bank; Industrial motors; BAHL; Millat and Colgate-Palmolive tractors. The main scripts that contributed negatively to the index included: PPL; OSP; TRG; OGDC; Hubco; INIL and DG Khan Ciment.
SBP’s reserves rose 1.8% to $ 16.4 billion; headline inflation for the first 10 months of FY21 reached 8.6% against 11.2% during the same period last year; Remittances rose 33.5 percent to $ 2.5 billion in May, bringing total inflows in 11MFY21 to $ 26.7 billion (up 29 percent).
Going forward, the tone of the market would be set by the FY22 budget which was presented by the Minister of Finance on the last day of the previous week.
Traders, analysts and investors appeared to be happy with the pro-market budget that responded to the long-standing demand for a reduction in the capital gains tax to 12.5% from 15%.
In addition, the removal of the 10% withholding tax (WHT) on margin financing was also seen as a potentially volume boosting measure. The government had continued to provide construction-related relief measures. Several analysts agreed that the FY22 budget was positive for cement, steel, energy, autos and consumer goods, which could be a catalyst for the KSE-100 index to reach. new heights.
And finally, the government’s announcement to ease the lockdown from June 15 would boost equity investor sentiment as underlying industrial production runs at full speed.
Posted in Dawn, le 13 June 2021