KARACHI, June 11: The initial investor reaction to the new budget was fairly encouraging as major beneficiaries of tax exemptions, incentives and duty adjustments performed credibly well under the lead of cement, auto and fertiliser sectors.
The market’s early upward drive reflected the general perception that maintaining of status quo in the budget is also an incentive in the wider market parlance, analyst Hasnain Asghar Ali said, adding “the weakness of the banking sector on selling prompted by some negative thinking on the fiscal steps did take its toll”.
It was also well-reflected in the KSE 100-share index which early was up by over 100 points at the session’s high of 13,378.00, but the mid-session rethinking on some of the concessions triggered selling pushing it down to close with a fractional decline of 6.59 points at 13,268.28 points.
However, the full post-budget market reaction would be known during the next couple of sessions as most of analysts are still in the process of assessing the positive and negative impact of al measures on the share business.
But those sectors which are to get instant benefit from the fresh incentives, notably cement on the increase of Rs110 billion in the PSDP size, fertiliser on subsidy followed by textiles, auto and oil marketing companies on similar concessions performed well on active short-covering.
“I think the market will hum with activity after the impact of fiscal measures on the capital market is fully understood,” said a leading analyst, adding “the initial investor reluctance is expected to fade out during the next couple of sessions”.
The tax exemption on capital gains tax for another year, withdrawal of tax on CFS income on mutual funds, tax relief on group companies, withdrawal of CVT on imported vehicles and custom duty adjustments for this sector will go a long way in boosting stock trading, analysts said.
“The budget in addition to some incentives for the selected sectors, mostly maintained a status quo which did not find favour with a section of investors and hence cautious reaction,” analyst Faisal A. Abbass said, adding “but in totality it is positive budget for the future share market”.
But as was widely speculated the budget did not opt for new taxes, it should be read in that perspective. Those who could read its future impact are preparing for a fresh buying euphoria on those counters where the potential of capital gain is sure, some others said.
Leading gainers were led by IGI Insurance, Pak-Suzuki Motors and Rafhan Maize, up by Rs17.15 and Rs80. JS Global, Central Insurance, Arif Habib Ltd, PSO, Indus Motors, Sanofi-Aventis, Packages, Grays of Cambridge, Sapphire Fibre, followed them, which posted gains ranging from Rs6.05 to Rs11.50.
Prominent losers were led by Fazal Textiles and Pakistan Services, off by Rs11.85 and Rs18.95 respectively. They were followed by MCB, EFU Life, Mehmood Textiles, Pakistan Tobacco, National Refinery, Noon Pakistan, KASB Pumps, United Bank and Wyeth Pakistan, off Rs4 to Rs10.
Trading volume showed a modest decline at 291m shares from the previous 297m shares but gainers maintained a firm lead over the losers at 192 to 162, with 37 shares holding on to the last levels.
D.G. Khan topped the list of most actives, up by Rs3.40 at Rs118.20 on 28m shares followed by Lucky Cement, up by Rs2.80 at Rs116.20 on 27m shares, Fauji Fertiliser Bin Qasim, steady 20 paisa at Rs37.25 on 19m shares, JS Bank, firm by 30 paisa at Rs18.55 on 18m shares, Bosicor Pakistan, steady by 15 paisa at Rs16.75 on 12m shares, Engro Chemical, sharply higher by Rs11.70 at Rs254.70 on 11m shares and Bank Alfalah, up by 75 paisa at Rs56.25 on 10m shares.
Other actives were led by Bank of Punjab, off Rs1.75 on 8m shares, Askari Bank, lower 85 paisa also on 8m shares and National Bank, off Rs3.85 on 7m shares.
FORWARD COUNTER: D.G. Khan Cement also led the list of actives on the cleared list and was quoted higher by Rs2.75 at Rs118.25 on 8m shares followed by Lucky Cement, higher by Rs3.40 at Rs116.90 on 7m shares and Engro Chemical, sharply higher by Rs12.15 at Rs255.40 on 5m shares.
PSO followed them, higher by Rs9.15 Rs416.40 on 5m shares and National Bank, off Rs4.90 at Rs255.10 also on 5m shares.
DEFAULTER COS: Nimir Chemicals led the list of actives on this counter but quoted unchanged at Rs3.45 on 0.458m shares followed by Mukhtar Textiles, up by 10 paisa at Rs2.60 on 0.376m shares and Zeal Pak Cement, unchanged at Rs5.05 on 364m shares.
Quice Foods and Norrie Textiles were also actively traded, steady both by five paisa at Rs4.80 and Rs2.45 on 0.142m and 0.127m shares respectively.