Investors anticipate positive budget
KARACHI: The stock market was dominated by the bulls that led the index to a four-year high in the outgoing week. The benchmark KSE-100 Index stormed past the 48,000 level to reach 48,212 points at the close of trading on Friday.
Week-on-week (WoW), the index collected 1,085 points (2.3 per cent) as the GDP growth projections and other macroeconomic indicators seemed to breathe new life into the economy. Anticipation of high GDP for the year at 3.9pc; the tax revenue collection at a historic high of around Rs4.143 trillion during 11MFY21 and the inflation figure clocking at 10.87pc, which was lower than expected fuelled investors interest in equities.
The drop in Covid-19 cases has encouraged authorities to gradually open up the economy, providing relief to the unemployed and those with shops and small businesses having to remained confined to their homes with a hit on their income.
Foreign investors turned in as net sellers during the outgoing week with an outflow of $0.2 million against net buying of $2.1m the preceding week. Selling was witnessed in Exploration & Production of shares worth $2.7m and Power Generation & Distribution $2.4m.
On the domestic front, major buying was reported by Individuals of shares of $11.1m and Mutual Funds $4.6m. Average volumes arrived at 1,122m shares (down by 9.4pc WoW) while average value traded settled at $192m (up by 7.9pc WoW).
Meanwhile, refinery sector put in grand performance, up 6.1pc during the week as news report suggested that a new policy for the sector was ready to be announced. Petroleum sales stood at all-time high of 1.7m tonnes, up 14pc YoY and exports posted a growth of 14pc YoY. Other news flows during the week suggested that the Ministry of Finance was likely to pay the first instalment to IPPs.
Going forward, market experts continue to be bullish in the run up to the Federal Budget 2021-22. The reports about anticipated steps in the budget regarding sector-wise incentives and taxes that would flow during the week will sway investors sentiments. As the government has already promised no new taxes, investors are likely to hold a positive outlook in the market and pick up stocks in the cement, steel, automobile, textile and allied export-oriented industries. Investors are aware of the government’s anticipated incentives for the construction sector with higher allocation for PSDP as well as to provide employment to large population of unemployed. The week would also provide auto sales data and PIB (fixed) auction results. The caveat remains the Covid-19 positive cases which if controlled and vaccination drive speeded up, can comfort investors and continue to garner their interest in equities.
Published in Dawn, June 6th, 2021