KARACHI: Investors greeted the Federal Budget 2021-22 with initial exuberance that saw the index hit intraday high by 677 points soon after the pre-opening session. However, the index closed with a gain of 421 points, or 0.87 per cent, at 48,726.

But at the index level reaching a stone’s throw away from 49,000 points, nervousness got better of mainly the institutional investors who decided to sell and book profit.

Foreign investors, companies, banks, brokers and insurance companies started to offload which would have had a damaging impact on the market but for the heavy buying of stocks worth $14.79m by individuals and the rest of the liquidity mopped up by mutual funds.

The tone of the market was set entirely by the budget proposals which were thought to be market-friendly. Investors appreciated the incentives of reduction in tax rates for various sectors. The long-standing demand of a cut in Capital Gains Tax to 12.5pc from 15pc stood out as a major sentiment booster.

Stocks that contributed positively to the index included OGDC (106 points), PPL (68 points), Systems Ltd (44 points), INIL (27 points) and POL (25 points). The shares gained values on sector-wise benefits from the budget. From the auto sector, Pak Suzuki Motor Company raced to the upper circuit right from the word go as the government decided to reduce GST on locally assembled cars up to 850cc to 12.50pc from 17pc along with the exemption from Federal Excise Duty.

From the E&P sector OGDC, PPL and Mari Petroleum closed higher on the back of a substantially higher dividend target set by the government from those companies.

Among steel stocks ASL and ISL moved to or near the upper limit on removal of customs duty on import of HRC. Citi Pharma IPO’s book building would be on Tuesday and Wednesday; the company plans to raise Rs2.8bn at floor price of Rs28 per share. Also Byco Petroleum Pakistan Ltd notified the PSX that the board had approved change in the company’s name from ‘Byco Petroleum Pakistan Ltd’ to ‘Cnergyico Pk Ltd’.

Published in Dawn, June 15th, 2021