This week trading commenced on a negative note in the stock market as the government unveiled missed targets for FY19 in the Economic Survey document along with arrest of Asif Ali Zardari (Ex-President) which resulted in the KSE-100 index decline by 938pts on Monday which is largest one-day closing of CY19.
To note, revival of investors’ confidence came after federal government announced budget in the National assembly for FY19-20 whereby profits made on all other investment avenues (property market and debt securities) were subjected to higher taxes while CGT regime for the equity market was kept unchanged.
In addition, the Federal government’s PSDP share has been increased by 40% YoY to PKR 701bn compared to PKR 500bn, which also triggered improvement in Cement and Steel sector.
By week end, the benchmark bourse posted a rebound to close with a positive return to 35,573pts, up by 68pts or 0.2% WoW.
Contribution to the upside was led by Fertilizer (+181pts), Cement (+65pts), Pharmaceuticals (+33pts), and Technology and Communication (+25pts).
Scrip wise major gainers were FFC (+122pts), SEARL (+37pts), ENGRO (+37pts), OGDC (+28pts), and TRG (+24pts).
Foreign selling continued this week clocking-in at USD 4.9mn compared to a net sell of USD 2.3mn last week.
Major selling was witnessed in Exploration & Production (USD 6.9mn) and All Other Sectors (USD 0.8mn).
On the local front, buying was reported by Individual (USD 2.8mn) followed by Mutual Funds (USD 2.7mn).
That said, average daily volumes for the outgoing week were up by 9% to 136mn shares likewise value traded increased by 8% to USD 34mn.
Other major news: Economic growth to slow down to 2.4%: finance ministry, Foreign exchange: SBP reserves drop 0.7% to stand at USD 7.8b, With reforms, current account deficit may hit USD 7bn,
Passenger car sales down 4.11% in 11 months, Shanghai Electric to finally acquire K-Electric this year.
Analysts view the market to remain positive in the upcoming weeks amid announced budgetary measures being positive for equities and making it the most attractive asset class for investors.
On the other hand, activation of a PSX stabilization fund in the foreseeable future will also improve sentiments, Market analysts view. Albeit, economic concerns continue to hover for instance high Current Account Deficit, endless slide of the PKR against Green Back and further rate hikes expected with inflation set to tick higher post adjustment in utility prices (gas and electricity tariff hike).
The KSE-100 is currently trading at a PER of 7.1x (2019) compared to Asia Pac regional average of 14.4x while offering a dividend yield of ~8.1% versus ~2.4% offered by the region.