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PSX ends volatile week nearly flat
Summary

The benchmark index of the KSE 100 closed volatile week nearly flat at 48,304 level gaining just 93 points over the last week’s close. Investors confidence started building up from last week end as encouraging news about state of Pakistan’s economy 2020-21 started flowing, which were confirmed by International institutions.”Economic activity rebounded strongly in fiscal year 2021 with growth preliminary estimated at 3.9 percent,” says IMF. Fitch Ratings predicts better than expected growth for Pakistan’s economy in FY22. Morgan Guaranty also confirmed Pakistan’s growth during last year of 3.94 percent. While launching of an Economic Survey 2020-21, Finance Minister said IMF told power tariff, income tax won’t be increased.

High sentiments were built which boosted the index up and gave the chance to investors for profit-taking and ultimately the index close with increase of 93.02 points to close flat from Monday 48,302.66 to Friday close of 48,304.72. The average volume during the week was Rs.079 billion shares while market capitalization moved up Rs1 billion to close at Rs.8.358 trillion

Stocks opened on Monday positive on the first trading day of the week and the KSE-100 index closed with a gain of 90.96 points at 48,302.66. The volume was 936m shares.

Stocks falters on Tuesday with the KSE-100 index declining by 154.68 or 0.32 percent at 48,147.98. The volume was 1.040 billion.

Pre budget profit-taking continued for the second day on Wednesday with the KSE-1000 index recording a fall of 370.36 points to close below the 48,000 level at 47,778.

Bulls returned with vengeance on Thursday, tossing KSE-100 index to 473.87 points over the psychological resistance of 48,000 to close at 48,251.49.

Meanwhile a volatile session was witnessed on Friday where market made a intraday high of 48,531 and low of 48,243 and closing at 48,304.72 with a gain of 93.02.

Participants/Activity

Foreigners were net seller $7.47m during the week; companies were buyers by $9.05m; Banks were seller $10.40m; Mutual fund net buyers $15.46m; individuals net seller $2.7m and Insurance were seller $10.20m.

Volume leaders during the were: World Call Telecom 1,647m; Hum Network 272m; PTCL 183m; Byco Petroleum 179m; K-Electric 109m; Agritech 60m; Unity Foods 42m; Kalco & PIAA 41m each; Pace Pakistan & TPL 35m each; and Telecard Ltd 31m. To see participation company avg was 419; gainers 194; losers 207m and unchanged 18.

Triggers

– Pakistan’s foreign exchange reserves rose to $23.577 billion during the week ended June 4 from $23.294 billion the preceding week.

-Steel bar prices once again moved up by Rs.3,000 to a record Rs.146,500 per tonne ahead of the federal budget.

– Government raises Rs.161 billion through PIBs.

– The country’s domestic debt has increased by over Rs.2 trillion during the current fiscal year (FY21). However, the amount was less than the amount borrowed in the same period of FY20.

– PSX has sought rationalization of tax rates for the listed companies and aligning rates of capital gain tax on disposal of securities in line with the regional practices in its budget proposal.

Conclusion

The government started presenting the budget during the market hour at 4pm. According to Finance Minister Shaukat Tarin the Budget shall focus on boosting growth, fighting inflation. Next year’s budget aims to support poor, create two million jobs. FBR will no longer issue notices; willful non-filers to be sent to jail. Revenue collection to be raised by 26 percent to meet IMF target of Rs.5.9 trillion next year. Power sector; state owned entities termed biggest challenge for government, country. China being requested to make Pakistan part of its industrial sunset process.

Raees Uddin Khan,
Research & Development, Institute of Securities Management Research & Training (Pvt) Ltd, Karachi.
Dated: June 11, 2021

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