Stocks drift lower in post-budget week

Published June 20, 2021
The market started off the week on a strong note with gains of 421 points in the first session following the announcement of the budget. — AFP/File
The market started off the week on a strong note with gains of 421 points in the first session following the announcement of the budget. — AFP/File

KARACHI: After five weeks of consecutive bull run on the Pakistan Stock Exchange that saw the KSE-100 carried to a four-year high, shares beat a retreat in the outgoing week with the index losing nominal 66 points, or 0.14 per cent, but still managing to close above the 48,000 level at 48,239 points.

The market started off the week on a strong note with gains of 421 points in the first session following the announcement of the budget and investors celebrated several incentives which were regarded as pro-market including the cut in Capital Gains Tax to 12.5pc from 15pc. Construction related cement and steel, refineries and technology saw share prices gallop to new highs.

Moreover, the government projected increased dividend expectation from OGDC and PPL which brought a surge of interest in Exploration & Production sector. However, the initial gains were totally lost in the days that followed due to profit-taking as investors were wary of the deadlock between IMF and the government; the upcoming FATF plenary meeting outlook and the hullabaloo in the National Assembly during the budget session.

Foreign investors offloaded equities amounting to $6.8m during the week against the net buy of $7.5m the preceding week. Outflow was witnessed from the commercial banks in the sum of $2.5m and technology $2.8m.

On the domestic front, major buying was reported by individuals valued at $21.43m followed by mutual funds amounting to $10.85m. Among other participants, companies saw net sale of stocks amounting to $11.34m and insurance companies $6.65m.

The average daily trading volume stood down by 3pc week-on-week to 1,049m shares while the average traded value up 6pc to $170m.

Going forward, pundits expect the market to remain under pressure in the upcoming week due to the rollover of future trades. Institutional investors would in particular watch out for the FATF plenary session starting on June 21, where hopes run high of Pakistan being able to skip out of the grey list as the country had fully implemented 26 of the 27 points of the action plan.

The thaw on the political front where the treasury and opposition benches were taking the budget arguments forward, provided the hope that the bill would sail through the Senate without big trouble.

Furthermore, on Covid-19 front, infection ratio has dropped to an 8-month low 1.91pc. All of that could prod the bulls to re-enter as the investors’ confidence returns on the incentive-laden pro-market budget. The decision of the FATF to let Pakistan go off the grey list could prove to be a major catalyst in taking market to new highs.

Published in Dawn, June 20th, 2021

Opinion

Justice for judges
Updated 30 Jul 2021

Justice for judges

It beggars belief that a senior high court judge is incompetent to serve in the Supreme Court.
Follow the child
30 Jul 2021

Follow the child

Observe the child and give her space to explore her own instincts.
Cost of neoliberalism
30 Jul 2021

Cost of neoliberalism

Our mental health crisis must be seen in the larger sociopolitical context.

Editorial

30 Jul 2021

Judge’s elevation

A CONTROVERSY roiling the legal fraternity for a few weeks has come to a head. It was precipitated by the Judicial...
PTI’s Sialkot win
30 Jul 2021

PTI’s Sialkot win

The PML-N’s internal duality is a particularly acute factor that is dragging down the party in electoral contests.
30 Jul 2021

Attack on Chinese

AN attack targeting two Chinese nationals in Karachi on Wednesday should put the security apparatus on alert in ...
29 Jul 2021

Saudi FM’s visit

THE Saudi-Pakistan relationship is decades old and has weathered a number of geopolitical storms. Of late, ties came...
29 Jul 2021

SBP’s high hopes

THE June spike in the current account deficit notwithstanding, the State Bank doesn’t look too worried about the...
Joy and sadness on K2
Updated 29 Jul 2021

Joy and sadness on K2

Pakistan’s mountains have a commercial value that remains untapped.