KARACHI: The run of the stocks broke from a gallop to a trot in the outgoing week with the KSE-100 index managing to climb by just 93 points, or 0.2 per cent, and settled at 48,304.

In the preceding week, the index had posted massive gains of 1,085 points, or 2.3pc, and stormed past the 48,000 resistance for the first time in four years.

With the market having digested all the positive news relating to the politics, improvement in macroeconomic numbers and drop in Covid-19 positive cases, the market turned in a volatile behaviour in the outgoing week.

Over the week, the market moved in line with the news flow regarding the contents of the Federal Budget FY22 which was announced on Friday. During the week, the government finally cleared Rs89bn to 20 IPPs, though it barely helped to cheer up the power sector.

Market watchers said that the investor sentiment on surprisingly healthy economic survey report; focus on FY22 budget and relaxed lockdown recommendations led the market towards upward trajectory. The index hit high and low of 48,303 points and 47,778 points during the week.

Net selling by foreigners continued for the second week with the outflow mainly seen from Exploration & Production, banks and other index heavyweight stocks. Mutual funds cherry-picking ahead of the budget. Individuals continued to dabble in low-priced stocks.

The average daily trading volume decreased by 3.8pc week-on-week at 1.079bn shares, while the average daily traded value declined by 15.2pc to $162m.

Top 10 positive contributors to the index included Engro Fertilisers; Systems Ltd; Unity Foods; Fauji Foundation; PTC; Habib Bank; Indus Motors; BAHL; Millat Tractors and Colgate-Palmolive. Major scrips that made negative contributions to the index included: PPL; PSO; TRG; OGDC; Hubco; INIL and D.G. Khan Cement.

SBP reserves rose by 1.8pc to $16.4bn; headline inflation for the first 10 months of FY21, clocked in at 8.6pc compared to 11.2pc in the same period last year; Remittances increased by 33.5pc to $2.5bn in May taking the total inflow in 11MFY21 to $26.7bn (up 29pc).

Going forward, the tone of the market would be set by the budget FY22 which was presented by the finance minister on the last day of the previous week.

Traders, analysts and investors seemed to be happy over the pro-market budget that attended to the long standing demand of reduction in Capital Gains Tax to 12.5pc from 15pc.

Moreover, the abolishment of 10pc Withholding Tax (WHT) on margin financing was also considered to be step that might boost volumes. The government had continued to provide the construction related relief measures. Several analysts consented that the FY22 budget was positive for cement, steel, power, automobiles and FMCGs which could be a catalyst for the KSE-100 index to new touch new highs.

And finally the government’s announcement to ease lockdown from June 15 onwards would enhance the investors sentiments in stocks as the underlying industrial production goes full throttle.

Published in Dawn, June 13th, 2021