KARACHI: The benchmark KSE-100 index ended its third consecutive session in green, adding 258 points (0.66 per cent) to close the week at 39,306.5. Market sentiments were driven by the anticipation of ease of doing business reforms expected in the upcoming mini-budget.

The capital markets are likely to gain from the coming mini-budget as according to initial reports, the government is said to eliminate advance tax of 0.2pc on brokers, rationalise group taxation system and reduce input costs for export-oriented sectors. Moreover, the new Securities and Exchange Commission Chairman Farrukh H. Subzwari said the government is committed to introduce new products in the capital market.

On the macro front, the Global Economic Conditions Survey said that the economic confidence has seen a sharp decline in the last quarter as government continues to grapple with the problems of economic imbalances. The government has struggled to rein in the waning investor confidence as it has fuelled uncertainty in the business community by not announcing its final decision regarding the International Monetary Fund.

However, according to data released by the State Bank of Pakistan, the incumbent government breathed a sigh of relief after the country’s current account deficit slipped by 4.4pc to $7.98 billion whereas foreign direct investment dipped by 19pc to $1.31bn during the first half of this fiscal year.

The government on Friday also revived the condition for importers to pay duties and taxes on used car imports to be made in the foreign exchange to be remitted by the same. According to market observers, the local assemblers are likely to benefit from this development which will help them gain a larger share of the auto market amid lack of competition.

Sector-wise, fertiliser emerged as the best performer gaining 135 points due to the possibility of resolution of Government Infrastructure Development Cess with expectations of 50pc waiver for the participants. Exploration and production and tobacco sector followed, adding 80 points amid expectations of potential discovery from the offshore blocks. On the flip side, cement and auto part assemblers remained under selling pressure as investors weighed the expected negative impacts for them in the coming budget.

Foreigners sold their positions in the outgoing week offloading $9.4 million against net buying of $0.6m in the previous week with selling mainly concentrated in the exploration and production stocks. Amongst local participants, individuals emerged as major buyers raking up $7.3m, followed by mutual funds $3.72m who increased their positions in the fertiliser scrips.

Average volume during the week decreased by 15pc to 118m shares, whereas traded value dipped 14pc to $40m. K-Electric was the leader, averaging 19.m shares traded, amid expectations of sale with the Shanghai Electric.

Investors will watch for cues from the mini-budget to be presented in the coming week. Finance Minister Asad Umar will present the ongoing fiscal year’s third budget on Jan 23 before the parliament which he says will be tax-free and focus on introduction of a range of ease of doing business reforms.

Published in Dawn, January 20th, 2019