KARACHI, June 6: Stocks on Tuesday reacted positively to the new budget and finished the post-budget session on a firm note as investors covered positions on the oil, bank and cement sectors having apparently an initial positive overview of the taxation proposals and relief measures.
“The budget is a judicious blend of both reliefs and taxes but in the broader market perceptions it tends to keep a status quo as far as the share business is concerned,” stock analysts Faisal Abbas said, adding “the initial fall was a psychological and failed to extend itself as bulls were back in the arena”.
Upper locks were applied on some of the leading cement shares on speculative buying on the perception of higher consumption after the development starts on some of the major projects including dams followed by oil and bank shares, which also turned in an identical performance.
“The new budget did tax the share business in the form of adjustments here and there but reliefs are expected to offset any negative fallout on real incomes of both the investor and the broker,” some others said.
The opening was, however, weak as a section of investors sold in a haste fearing a market collapse owing to increase in the CVT and other taxes, pushing the index lower 246 points.
But leading investors who had already welcomed the budget as stock market-friendly because of some of the new taxes including 2 per cent withholding tax on real estate and five per cent on rental incomes, which they hoped huge funds may be diverted to the share business from the real estate in future.
The KSE 100-share index finished with a fresh gain of 158.00 points or 1.52 per cent at 10,531.86 after having hit the day’s lowest and highest at 10,131.83 and 10,654.68, showing a massive either-way movement of 528 points.
“Barring an increase to 0.02pc from the previous 0.01pc in the Capital Value Tax (CVT) and 0.01pc from 0.005pc in the withholding tax the new budget maintains a near-status quo as for as capital markets are concerned,” says Hasnain Asghar Ali while commenting on the likely positive or negative impact of the new budget on stock trading.
But those who could peep through the future and have a faith in the inherent strength of the market maintain that the hike in CVT or withholding tax would take out a small amount from the pockets of market players having a little impact on the overall profits.
But the chief factor, which pulled the market out from the early lows was the switchover of the mutual funds from the badla market where the interest rates are high compared to the retail equity business, Ahsan Mehanti, another stock analyst said.
Plus signs dominated the list thanks to active short-covering on all the blue chips as gainers held a strong lead over the losers at 175 to 122, with 27 shares holding on to the last levels.
Treet Corporation and Arif Habib Securities were leading among the gainers, up by Rs15 and Rs10 followed by EFU Life Lucky Cement, BOC Pakistan, Engro Chemical, Abbott Lab, Pakistan Engineering, MCB, Lucky Cement and Shell Pakistan, which posted gains ranging from Rs4 to Rs9.90.
Losers were led by Millat Tractors and Al-Ghazi Tractors on selling triggered by permission to import duty-free tractors, Unilever Pakistan, Island Textiles, Pakistan Cables, Gatron Industries, IGI Insurance and AKD Securities, off by Rs5 to Rs24, largest fall of Rs15.10 being in Millat Tractors.
Trading volume rose to 265m shares from the previous 103m shares owing to strong buying in OGDC and National Bank and some others.
OGDC topped the list of actives, up by Rs3.80 at Rs142.20 on 59m shares followed by National Bank, firm by 95 paisa at Rs218.45, day’s highest being Rs226.45, on 32m shares, D.G. Khan Cement, higher by Rs4.80 at Rs101.05 on 19m shares, Pakistan Petroleum, up by Rs4.40 at Rs234.65 on 18m shares, Pakistan Oilfields, higher by Rs4.50 at Rs371 on 12m shares and MCB, up by Rs4.55 at Rs214 on 9m shares.
Other actives were led by Fauji Fertiliser Bin Qasim, firm by 80 paisa on 13m shares, Fauji Cement, up by 95 paisa on 11m shares, Lucky Cement, higher by Rs5.25 on 10m shares and Bank of Punjab, up by Rs1.75 on 9m shares.
FORWARD COUNTER: National Bank led the list of actives on the cleared list and was marked up by Re1 at Rs219.50 on 23m shares followed by OGDC, higher by Rs3.55 at Rs140.85 on 21m shares and Pakistan Oilfields, up by Rs3.75 at Rs235.25 on 11m shares.
Pakistan Oilfields followed them, higher by Rs3.50 at Rs371.50 on 9m shares and Lucky Cement, up by Rs5 at Rs110.50 on 8m shares.
DEFAULTER COS: Active trading was witnessed in Dandot Cement on the perception of higher sales of the commodity after development works starts on dams and other mega projects. It was quoted higher by 25 paisa at Rs13.20 on 0.187m shares followed by Crescent Standard Bank, lower 20 paisa at Rs4.50 on 0.110m shares. Others were modestly traded but mostly on the higher side.