Budget vibes to set market direction

Investors are keeping a close eye on budget-related news and unfolding of amnesty scheme to take investment decisions after the market soared ahead of the government tax measures, dealers said.

“With the widely anticipated amnesty scheme now announced, the market is expected to head into a consolidation phase next week,” Elixir Securities said in a report.

Stocks surged 2.4 percent during the week ended April 6, taking gains to 15.2 percent in the past three months and completely wiping out the entire losses incurred during the nine months of the current fiscal year. The market witnessed positive trend in anticipation of announcement of amnesty scheme and government’s steps for resolution of external account woes.

“Investors turned to banks anticipating foreign inflows through official channels post announcement (of amnesty),” brokerage Arif Habib Limited said in weekly market review.

The benchmark KSE-100 shares index gained 2.36 percent or 1077.32 points to close the week at 46,637.62 points. KSE-30 shares index gained 2.89 percent or 658.98 points to end at 23,460.32 points.

Average traded volume significantly picked up, rising eight percent to 260 million shares/day in the week. Net foreign inflows, during the week, amounted to $3.6 million.

Analyst Amreen Soorani at JS Global Capital said optimism continued on rallies in cement (up 3.7pc), oil and gas marketing (rising 3.1pc) and exploration and production (soaring 1.7pc).

“Cement players sustained an upward trajectory as the week witnessed another price hike of Rs10/bag, taking cumulative price increase to Rs60/bag,” Soorani added. Net buying from foreign and institutional investors more than offset neutral policy rate’s shocks to banking sector that was up 1.2 percent.

Foreign exchange reserves dropped $152 million to $17.8 billion. However, developments, such as International Islamic Trade Finance Corp lending $3.285 billion to finance trade activities and the World Bank approving $145 million to expand home ownership are expected to extend some support to the foreign exchange reserves.

Government finally announced the tax amnesty scheme towards the end of the week in order to incentivise repatriation of assets back to the country. The development exerted minimal impact on the local bourse as investors remained skeptical over implementation and success of the scheme, dealers said.

The week remained full of budget-related news flows, such as proposal of cut in taxes for salaried class, government eyeing fiscal deficit at 4.6 percent for the next fiscal year with cut in development spending, proposal to withdraw super tax and fertiliser industry urging government to abolish gas infrastructure development cess on feed gas. Government’s consideration to abolish regulatory duty on steel wiped out partial gains of the steel sector during the week, but the sector managed to gain 2.9 percent.